Revenue and Contract Liabilities

Our revenues are primarily recognized at a point in time, when control of the promised goods is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods. Contracts with our customers are generally short-term in duration at fixed, negotiated prices with payment generally due shortly after delivery. We estimate a liability for returns using the expected value method based on historical rates of return. In addition, we generally offer price protection to our distributors, which is a form of variable consideration that decreases the transaction price. We estimate the amount of consideration we expect to be entitled to from sales to distributors, using the expected value method, based on historical price adjustments and current pricing trends. Differences between the estimated and actual amounts are recognized as adjustments to revenue. (See "Segment and Other Information" note for disclosure of disaggregated revenue.)

Contract Liabilities



As of	February 28, 2019		Opening Balance as of August 31, 2018
Contract liabilities from customer advances	$	147	$	235
Other contract liabilities	108		113
	$	255	$	348

Our contract liabilities are for advance payments received from customers to secure product in future periods and for other arrangements where we have received amounts in advance of satisfying performance obligations and are reported in the accompanying consolidated balance sheets within other current liabilities and other noncurrent liabilities. Revenue and interest expense associated with contract liabilities for the time value of advance payments was not material in any period presented. As of February 28, 2019, our future performance obligations beyond one year were not material.

Changes in contract liabilities for the first six months of 2019 were as follows:



Contract liabilities balance as of August 31, 2018	$	348
Revenue recognized from beginning balance	(163		)
Additions and other activity	70
Contract liabilities balance as of February 28, 2019	$	255

Contract liabilities increase as a result of receiving new advance payments from customers and decrease as revenue is recognized from customers purchasing product under advance payment arrangements. Additions and other activity included new customer advances, payments received from license and other arrangements in advance of performance, and interest accrued for financing components on advance payments. Revenue recognized for the first six months of 2019 from the beginning balance included $148 million from shipments against customer advances and $15 million from meeting other performance obligations.

Consideration Payable to Customers

As of February 28, 2019, other current liabilities included $383 million for estimates of consideration payable to customers, including estimates for pricing adjustments and returns.