DEFERRED REVENUES

12 Months Ended

May 31, 2018

Deferred Revenue Disclosure [Abstract]

DEFERRED REVENUES

9. DEFERRED REVENUES

Deferred revenues consisted of the following:

	May 31,
(in millions)	2018		2017
Cloud services and license support	$	7,292	$	7,144
Hardware		645		640
Services		437		382
Cloud license and on-premise license		55		67
Deferred revenues, current		8,429		8,233
Deferred revenues, non-current (in other non-current liabilities)		625		602
Total deferred revenues	$	9,054	$	8,835

Deferred cloud services and license support revenues and deferred hardware revenues substantially represent customer payments made in advance for cloud or support contracts that are typically billed in advance with corresponding revenues generally being recognized ratably over the contractual periods. Deferred services revenues include prepayments for our services business and revenues for these services are generally recognized as the services are performed. Deferred new cloud license and on-premise license revenues typically resulted from customer payments that relate to undelivered products or specified enhancements, customer-specific acceptance provisions, time-based license arrangements and license transactions that cannot be separated from undelivered consulting or other services.

In connection with our acquisitions, we have estimated the fair values of the cloud services and license support, and hardware obligations, among others, assumed from our acquired companies. We generally have estimated the fair values of these obligations assumed using a cost build-up approach. The cost build-up approach determines fair value by estimating the costs related to fulfilling the obligations plus a normal profit margin. The sum of the costs and operating profit approximates, in theory, the amount that we would be required to pay a third party to assume these acquired obligations. These aforementioned fair value adjustments recorded for obligations assumed from our acquisitions reduced the cloud services and license support and hardware deferred revenues balances that we recorded as liabilities from these acquisitions and also reduced the resulting revenues that we recognized or will recognize over the terms of the acquired obligations during the post-combination periods.