Table of Contents Under the new guidance, revenue on warranty products and services is recognized more slowly as compared to the historic revenue recognition pattern. In addition, for warranty products where the Company acts as the principal in the transaction, Non-insurance warranty revenue and Non- insurance warranty expense are increased to reflect the gross amount paid by consumers, including the retail seller’s markup which is considered a commission to the Company's agent. This gross-up of revenue and expense also resulted in an increase to Deferred non-insurance warranty acquisition expense and Deferred non-insurance warranty revenue on the Company's Consolidated Balance Sheets as the revenue and expense are recognized over the actuarially determined expected claims emergence pattern. The cumulative effect changes to the Consolidated Balance Sheet for the adoption of the updated guidance on January 1, 2018 were as follows: The impact of adoption on the Consolidated Statements of Operations and Balance Sheet was as follows: (1) The Prior to Adoption amounts presented in this table include the cumulative effect adjustment at adoption presented in the prior table. See Note R to the Consolidated Financial Statements for additional information regarding non-insurance revenues from contracts with customers. ASU 2016-01:  In January 2016, the FASB issued ASU No. 2016-01,  Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities . The updated accounting guidance requires changes to the reporting model for financial instruments. The guidance primarily changes the model for equity securities by requiring changes in the fair value of equity securities (except those accounted for under the equity method of accounting, those without readily determinable fair values and those that result in consolidation of the investee) to be recognized through the income statement. 59 Year ended December 31, 2018 Prior to Adoption Effect of Adoption As Reported (In millions) Statement of operations: Non-insurance warranty revenue $ 420 $ 587 $ 1,007 Total revenues 9,547 587 10,134 Non-insurance warranty expense 328 595 923 Total claims, benefits and expenses 8,575 595 9,170 Income before income tax 972 (8 ) 964 Income tax expense (153) 2 (151) Net income 819 (6 ) 813 Balance sheet$^{(1) }$at December 31, 2018: Deferred non-insurance warranty acquisition expense $ 2,116 $ 397 $ 2,513 Deferred non-insurance warranty revenue 2,997 405 3,402 Deferred income taxes 390 2 392 Retained earnings 9,283 (6 ) 9,277 (In millions) Balance as of December 31, 2017 Adjustments Due to Adoption of Topic 606 Balance as of January 1, 2018 Deferred non-insurance warranty acquisition expense $ 212 $ 1,882 $ 2,094 Deferred non-insurance warranty revenue 972 1,969 2,941 Deferred income taxes 137 21 158 Retained earnings 9,414 (66) 9,348