Revenue from product sales is recognized upon transfer of control of products to customers in an amount

that reflects the consideration we expect to receive in exchange for those products. Certain products are

sold with support or an extended warranty for the incorporated system, hardware, and$/$or software.

Support and extended warranty revenue are recognized ratably over the service period, or as services are

performed. Revenue is recognized net of allowances for returns, customer programs and any taxes

collected from customers.

For products sold with a right of return, we record a reduction to revenue by establishing a sales return

allowance for estimated product returns at the time revenue is recognized, based primarily on historical

return rates. However, if product returns for a fiscal period are anticipated to exceed historical return

rates, we may determine that additional sales return allowances are required to properly reflect our

estimated exposure for product returns.

Our customer programs involve rebates, which are designed to serve as sales incentives to resellers of our

products in various target markets, and marketing development funds, or MDFs$,$ which represent monies

paid to our partners that are earmarked for market segment development and are designed to support our

partners$$ activities while also promoting NVIDIA products. We account for customer programs as a

reduction to revenue and accrue for potential rebates and MDFs based on the amount we expect to be

claimed by customers.

How would Nvidia record a $$100$ sale transaction that has a $3\%$ return rate $($for a

full refund$)$ but does not include any sales incentives $($provide the accounts

affected and label them as asset, liability, revenue, or expense accounts$)$