Sale-Type Leases and Financing Receivable

12 Months Ended

Sep. 30, 2015

Receivables [Abstract]

Sale-Type Leases and Financing Receivable

Sales-Type Leases and Financing Receivables

As disclosed in Note 9, the net assets acquired in the Company’s acquisition of CareFusion included a $1.208 billion net investment in sales-type leases which primarily arose from the leasing of dispensing equipment. The components of the net investment in sales-type leases, which predominantly have five-year terms and are generally collateralized by the underlying equipment, are as follows as of September 30, 2015.

	September 30,
(Millions of dollars)	2015
Future minimum lease payments receivable	$	1,311
Unguaranteed residual values	29
Unearned income	(142		)
Allowance for uncollectible minimum lease payments receivable	(5		)
Net Investment in Sales-Type Leases	1,193
Less: Current portion of net investment in sales-type leases	75
Net Investment in Sales-Type Leases, Less Current Portion	$	1,118

Future minimum lease payments to be received pursuant to sales-type leases are as follows: 2016 — $413 million; 2017 — $355 million; 2018 — $275 million; 2019 — $187 million; 2020 — $79 million and an aggregate of $3 million thereafter.

The methodology for determining the allowance for credit losses for these financing receivables is based on the collective population and is not stratified by class or portfolio segment. Allowances for credit losses on the entire portfolio are recorded based on historical experience loss rates and the potential impact of anticipated changes in business practices, market dynamics, and economic conditions. The net investment in sales-type leases is predominantly evaluated for impairment on a collective basis; however, some immaterial allowances for individual balances are recorded based on the evaluation of customers’ specific circumstances. No interest is accrued on past due financing receivables, which are generally considered past due 30 days after the billing date. Amounts are written off against the allowance for credit losses when determined to be uncollectible. The allowance for credit losses on these financing receivables was immaterial at September 30, 2015.