DEFERRED REVENUES AND COSTS

6 Months Ended

Jun. 30, 2020

Revenue From Contract With Customer [Abstract]

DEFERRED REVENUES AND COSTS

11. DEFERRED REVENUES AND COSTS

The Company defers revenues and all direct costs associated with the sale of pre-need cemetery merchandise and services until the merchandise is delivered or the services are performed. The Company recognizes deferred merchandise and service revenues as customer contract liabilities within long-term liabilities on its consolidated balance sheets. The Company recognizes deferred direct costs associated with pre-need cemetery merchandise and service revenues as deferred selling and obtaining costs within long-term assets on its consolidated balance sheets. The Company also defers the costs to obtain new pre-need cemetery and new prearranged funeral business as well as the investment earnings on the prearranged services and merchandise trusts. Such costs are recognized when the associated performance obligation is fulfilled based upon the net change in the customer contract liabilities. All other selling costs are expensed as incurred. Additionally, the Company has elected the practical expedient of not recognizing incremental costs to obtain a contract as incurred, as the associated amortization period is typically one year or less.

Deferred revenues and related costs consisted of the following (in thousands):

	June 30, 2020			December 31, 2019
Deferred contract revenues	$	829,390		$	837,190
Deferred merchandise trust revenue		97,841			104,304
Deferred merchandise trust unrealized gains (losses)		(16,361	)		7,881
Deferred revenues	$	910,870		$	949,375
Deferred selling and obtaining costs	$	115,401		$	114,944

For the six months ended June 30, 2020 and 2019, the Company recognized $34.7 million and $41.0 million, respectively, of the customer contract liabilities balance that existed at December 31, 2019 and 2018, respectively, as revenue.

The components of the customer contract liabilities, net in the Company’s consolidated balance sheets at June 30, 2020 and December 31, 2019 were as follows (in thousands):

	June 30, 2020			December 31, 2019
Customer contract liabilities, gross	$	934,044		$	974,927
Amounts due from customers for unfulfilled performance obligations on cancellable pre-need contracts		(23,174	)		(25,552	)
Customer contract liabilities, net	$	910,870		$	949,375

The Company expects to service approximately 55% of its deferred revenue in the first 4-5 years and approximately 80% of its deferred revenue within 18 years. The Company cannot estimate the period when it expects its remaining performance obligations will be recognized, because certain performance obligations will only be satisfied at the time of death.