DuPont 2012 Annual Report Download - page 57

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(Dollars in millions, except per share)
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The company follows generally accepted accounting principles in the United States of America (GAAP). The significant accounting policies described below,
together with the other notes that follow, are an integral part of the Consolidated Financial Statements.
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The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
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The Consolidated Financial Statements include the accounts of the company, subsidiaries in which a controlling interest is maintained and variable interest
entities (VIEs) for which DuPont is the primary beneficiary. For those consolidated subsidiaries in which the company's ownership is less than 100 percent,
the outside stockholders' interests are shown as noncontrolling interests. Investments in affiliates over which the company has significant influence but not a
controlling interest are carried on the equity method. At December 31, 2012, the assets, liabilities and operations of VIEs for which DuPont is the primary
beneficiary were not material to the Consolidated Financial Statements of the company.
The company is also involved with certain joint ventures accounted for under the equity method of accounting that are VIEs. The company is not the primary
beneficiary, as the nature of the company's involvement with the VIEs does not provide it the power to direct the VIEs significant activities. Future events may
require these VIEs to be consolidated if the company becomes the primary beneficiary. At December 31, 2012, the maximum exposure to loss related to the
unconsolidated VIEs is not considered material to the Consolidated Financial Statements of the company.
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Certain reclassifications of prior year's data have been made to conform to current year's presentation. In the third quarter 2012, the company signed a
definitive agreement to sell its Performance Coatings business (which represented a reportable segment). In accordance with GAAP, the results of Performance
Coatings are presented as discontinued operations and, as such, have been excluded from continuing operations in the Consolidated Income Statements and
from segment results for all periods presented. The sum of the individual earnings per share amounts from continuing and discontinued operations may not
equal the total company earnings per share amounts due to rounding. The assets and liabilities of Performance Coatings at December 31, 2012 have been
reclassified and segregated as held for sale in the Consolidated Balance Sheet while corresponding amounts at prior year-ends have not been reclassified and
presented as such. The cash flows and comprehensive income related to Performance Coatings have not been segregated and are included in the Consolidated
Statements of Cash Flows and Comprehensive Income, respectively, for all periods presented. Amounts related to Performance Coatings are consistently
included in or excluded from the Notes to the Consolidated Financial Statements based on the financial statement line item and period of each disclosure. See
Note 2 to the Consolidated Financial Statements for further information.
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The company recognizes revenue when the earnings process is complete. The company's revenues are from the sale of a wide range of products to a diversified
base of customers around the world. Revenue for product sales is recognized upon delivery, when title and risk of loss have been transferred, collectability is
reasonably assured and pricing is fixed or determinable. Substantially all product sales are sold FOB (free on board) shipping point or, with respect to non
United States of America (U.S.) customers, an equivalent basis. Accruals are made for sales returns and other allowances based on the company's experience.
The company accounts for cash sales incentives as a reduction in sales and noncash sales incentives as a charge to cost of goods sold or selling expense,
depending on the nature of the incentive. Amounts billed to customers for shipping and handling fees are included in net sales and costs incurred by the
company for the delivery of goods are classified as cost of goods sold and other operating charges in the Consolidated Income Statements. Taxes on revenue-
producing transactions are excluded from net sales.
The company periodically enters into prepayment contracts with customers in the Agriculture segment and receives advance payments for product to be
delivered in future periods. These advance payments are recorded as deferred revenue (classified as other accrued liabilities) or debt, depending on the nature of
the program. Revenue associated with advance payments is recognized as shipments are made and title, ownership and risk of loss pass to the cu stomer.
Licensing and royalty income is recognized in accordance with agreed upon terms, when performance obligations are satisfied, the amount is fixed or
determinable and collectability is reasonably assured.
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