Contract Assets and Liabilities

3 Months Ended

Mar. 31, 2024

Revenue from Contract with Customer [Abstract]

Contract Assets and Liabilities

Note 7: Contract Assets and Liabilities

Contract assets reflect revenue recognized and performance obligations satisfied in advance of customer billings. 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 were as follows:

(dollars in millions)	March 31, 2024		December 31, 2023
Contract assets	$	13,104	$	12,139
Contract liabilities	(17,119)		(17,183)
Net contract liabilities	$	(4,015)	$	(5,044)

Contract assets increased $965 million during the quarter ended March 31, 2024 primarily due to sales in excess of billings on certain contracts at Pratt & Whitney and Raytheon. We recognized revenue of $2.6 billion during the quarter ended March 31, 2024, related to contract liabilities as of January 1, 2024 and $1.9 billion during the quarter ended March 31, 2023, related to contract liabilities as of January 1, 2023.

As of March 31, 2024, our Contract liabilities include approximately $405 million of advance payments received from a Middle East customer on contracts for which we no longer believe we will be able to execute on or obtain required regulatory approvals. These advance payments may become refundable to the customer if the contracts are ultimately terminated.

Contract assets are net of an allowance for expected credit losses of $194 million and $197 million as of March 31, 2024 and December 31, 2023, respectively.