Revenue Recognition policy of Walmart INC.

Revenue Recognition policy of Walmart INC.

Company: Walmart INC

Business: Retail sales

Reference to annual Report of: 2011

The Company recognizes sales revenue net of sales taxes and estimated sales returns at the time it sells merchandise to the customer. (Refer Explanation 1.1) Customer purchases of shopping cards are not recognized as revenue until the card is redeemed and the customer purchases merchandise by using the shopping card. (Refer Explanation 1.2)The Company also recognizes revenue from service transactions at the time the service is performed. Generally, revenue from services is classified as a component of net sales on our Consolidated Statements of Income.

Revenue Recognition of Sam’s Club Membership Fee

The Company recognizes Sam’s Club membership fee revenue both in the United States and internationally over the term of the membership, which is 12 months. The deferred membership fee is included in accrued liabilities on the accompanying Consolidated Balance Sheets.

Author’s Remarks:

Explanation 1.1

As per para 8 of IAS 18:

“Revenue includes only the gross inflows of economic benefits received and receivable by the entity on its own account. Amounts collected on behalf of third parties such as sales taxes, goods and services taxes and value added taxes are not economic benefits which flow to the entity and do not result in increases in equity. Therefore, they are excluded from revenue.”

The receipt of sales tax is not received on account of company and hence is not added to Revenue.

Explanation 1.2

Receipt of money for sale of shopping card is a liability for the company and is not revenue for the company unless the company sells the goods. Hence purchase of shopping card is not recognized as revenue.