Revenue Recognition

9 Months Ended

Sep. 30, 2020

Revenue from Contract with Customer [Abstract]

We account for revenue in accordance with Accounting Standards Codification ("ASC") Topic 606: Revenue from Contracts with Customers.

Performance Obligations. The Company's revenue streams include new equipment, maintenance and repair and modernization (including related installation). New equipment, modernization and repair services revenue is typically recognized over time as we are enhancing an asset the customer controls. Maintenance revenue is recognized on a straight-line basis over the life of the maintenance contract.

For new equipment and modernization transactions, equipment and installation are typically procured in a single contract providing the customer with a complete installed elevator or escalator unit. The combination of equipment and installation are typically a single performance obligation. For repair services, the customer typically contracts for specific short-term services which form a single performance obligation. For these performance obligations, revenue is recognized over time using costs incurred to date relative to total estimated costs at completion in order to measure progress.

For maintenance contracts, given the continuous nature of the maintenance services throughout the year, we recognize revenue on maintenance contracts on a straight-line basis which aligns with the cost profile of these services.

Contract Assets and Liabilities. Contract assets reflect revenue recognized in advance of customer billing. Contract liabilities are recognized when a customer pays consideration, or we have a right to receive an amount of unconditional consideration, in advance of the satisfaction of performance obligations under the contract. We typically receive progress payments from our customers as we perform our work over time.

Total Contract assets and Contract liabilities at September 30, 2020 and December 31, 2019 are as follows:


(dollars in millions)	September 30, 2020		December 31, 2019
Contract assets, current	$	481	$	529

Total contract assets	481		529

Contract liabilities, current	2,503		2,270
Contract liabilities, noncurrent (included within Other long-term liabilities)	33		18
Total contract liabilities	2,536		2,288
Net contract liabilities	$	2,055	$	1,759

Contract assets decreased by $48 million during the nine months ended September 30, 2020 as a result of the progression of current contracts and timing of billing on customer contracts. Contract liabilities increased by $248 million during the nine months ended September 30, 2020 primarily due to contract billings in excess of revenue earned. In the nine months ended September 30, 2020 and 2019, we recognized revenue of $1.5 billion related to the contract liabilities as of January 1, 2020 and as of January 1, 2019.

Remaining Performance Obligations ("RPO"). RPO represents the aggregate amount of total contract transaction price that is unsatisfied or partially unsatisfied. As of September 30, 2020, our total RPO was approximately $16.9 billion. Of the total RPO as of September 30, 2020, we expect approximately 90% will be recognized as sales over the following 24 months. On December 31, 2019, we had approximately $16.4 billion of remaining performance obligations, at which time we expected to recognize approximately 91% of these remaining performance obligations as sales in the next 24 months.