Contract Assets and Liabilities (Notes)

3 Months Ended

Mar. 31, 2020

Revenue from Contract with Customer [Abstract]

Contract Assets and Liabilities. Contract assets reflect revenue recognized and performance obligations satisfied in advance of customer billing. Contract liabilities relate to payments received in advance of the satisfaction of performance under the contract. We receive payments from customers based on the terms established in our contracts. Total contract assets and contract liabilities as of March 31, 2020 and December 31, 2019 are as follows:


(dollars in millions)	March 31, 2020		December 31, 2019
Contract assets, current	$	4,549	$	4,184
Contract assets, noncurrent (included within Other assets)	1,277		1,338
Total contract assets	5,826		5,522
Contract liabilities, current	(6,384)		(6,180)
Contract liabilities, noncurrent	(5,554)		(5,732)
Total contract liabilities	(11,938)		(11,912)
Net contract liabilities	$	(6,112)	$	(6,390)

Contract assets increased $304 million during the quarter ended March 31, 2020 due to revenue recognition in excess of customer billings, primarily on Pratt & Whitney military and commercial aftermarket service agreements. Contract liabilities increased $26 million during the quarter ended March 31, 2020 due to customer billings in excess of revenue recognized at Otis of $278 million, primarily offset by a contract settlement at Pratt & Whitney. We recognized revenue of $2.2 billion during the quarter ended March 31, 2020 related to contract liabilities as of December 31, 2019.

Total contract assets include an allowance for credit losses of $58 million as of March 31, 2020, of which $29 million is attributed to the estimated impact of COVID-19. Changes in the allowance were not material for the quarter ended March 31, 2020.