Recent Accounting Pronouncements (Tables)

6 Months Ended

Jan. 26, 2019

Summary of New Accounting Pronouncements

The following table summarizes the cumulative effect of the changes made to the Consolidated Balance Sheet for the adoption of ASC 606, ASU 2016-01, Financial Instruments, and ASU 2016-16, Intra-Entity Transfers of Assets Other than Inventory (in millions):



Line Item in Consolidated Balance Sheet:	Balance at July 28, 2018			New Revenue Recognition Standard				New Financial Instruments Standard				New Intra-Entity Transfers Standard				Adjusted Balance at July 29, 2018
ASSETS
Accounts receivable, net	$	5,554		$	(104	)	⁽¹⁾	$	—			$	—			$	5,450
Inventories	$	1,846		$	(302	)	⁽²⁾	$	—			$	—			$	1,544
Other current assets (includes capitalized contract acquisition costs)	$	2,940		$	371		^{(3), (4)}	$	—			$	(25	)	⁽³⁾	$	3,286
Deferred tax assets	$	3,219		$	(624	)	⁽³⁾	$	(15	)	⁽³⁾	$	1,415		⁽⁸⁾	$	3,995
Other assets (includes capitalized contract acquisition costs)	$	1,582		$	327		⁽⁴⁾	$	136		⁽⁷⁾	$	(91	)	⁽³⁾	$	1,954

TOTAL ASSETS	$	108,784		$	(332	)		$	121			$	1,299			$	109,872

LIABILITIES AND EQUITY
Income taxes payable	$	1,004		$	—			$	—			$	11		⁽³⁾	$	1,015
Deferred revenue — current	$	11,490		$	(1,702	)	⁽⁵⁾	$	—			$	—			$	9,788
Other current liabilities	$	4,413		$	33		⁽⁶⁾	$	—			$	—			$	4,446
Deferred revenue — non-current	$	8,195		$	(1,081	)	⁽⁵⁾	$	—			$	—			$	7,114
Other long-term liabilities	$	1,434		$	85		⁽³⁾	$	13		⁽³⁾	$	—			$	1,532
Retained earnings	$	1,233		$	2,333		⁽¹⁰⁾	$	283		⁽¹⁰⁾	$	1,281		⁽¹⁰⁾	$	5,130
Accumulated other comprehensive income (loss)	$	(849	)	$	—			$	(175	)	⁽⁹⁾	$	7		⁽³⁾	$	(1,017	)

TOTAL LIABILITIES AND EQUITY	$	108,784		$	(332	)		$	121			$	1,299			$	109,872

⁽¹⁾ Primarily represents the decrease to accounts receivable related to the change in recognizing revenue on sales to two-tier distributors from a sell-through to a sell-in basis

⁽²⁾ Primarily represents the reduction of inventory for the change from recognizing revenue on sales to two-tier distributors from a sell-through to a sell-in basis

⁽³⁾ Includes the impacts to deferred tax assets, liabilities and other income tax balances

⁽⁴⁾ Primarily represents capitalized contract acquisition costs (e.g. commissions)

⁽⁵⁾ Primarily represents deferred revenue adjusted to retained earnings primarily due to the change in revenue recognition for certain software arrangements from ratable to upfront, recognizing revenue on sales to two-tier distributors from a sell-through to a sell-in basis. Of this total $2.8 billion adjustment, $2.6 billion related to product deferred revenue, of which $1.3 billion relates to our recurring software and subscription offers, $0.6 billion relates to two-tier distribution, and the remainder relates to non-recurring software and other adjustments.

⁽⁶⁾ Primarily represents the reclassification of accounts receivable contra balances to other current liabilities, adjustments to rebate liabilities for the change from recognizing revenue on sales to two-tier distributors from a sell-through to a sell-in basis, and reclassifications from other current liabilities for amounts that are not contract liabilities under ASC 606

⁽⁷⁾ Represents the adjustment due to the remeasurement of non-marketable equity investments at fair value

⁽⁸⁾ Primarily represents the change in net deferred tax assets related to unrecognized income tax effects of intra-entity asset transfers

⁽⁹⁾ Represents the reclassification of net unrealized gains from accumulated other comprehensive income (loss) to retained earnings

⁽¹⁰⁾ Retained earnings impact from the adjustments noted above

The table below details the timing of when revenue was typically recognized under the prior revenue standard compared to the timing of when revenue is typically recognized under ASC 606 for these major areas:



	Prior Revenue Standard	ASC 606
Software arrangements:
Perpetual software licenses	Upfront	Upfront
Term software licenses	Ratable	Upfront
Security software licenses	Ratable	Ratable
Enterprise license agreements (software licenses)	Ratable	Upfront
Software support (maintenance)	Ratable	Ratable
Software-as-a-service	Ratable	Ratable
Two-tier distribution	Sell-Through	Sell-In