REVENUE RECOGNITION

12 Months Ended

Dec. 31, 2024

Revenue from Contract with Customer [Abstract]

REVENUE RECOGNITION

REVENUE RECOGNITION

CONTRACT AND OTHER DEFERRED ASSETS.

Contract assets reflect revenue recognized on contracts with customers in excess of billings based on contractual terms. Contract assets are classified as current or non-current based on the amount of time expected to lapse until the Company’s right to consideration becomes unconditional. Other deferred assets consist of costs to obtain contracts, primarily commissions, other cost deferrals for shipped products, and deferred service, labor, and direct overhead costs.

	As of
	December 31, 2024		December 31, 2023
Contract assets	$	589	$	600
Other deferred assets	385		400
Contract and other deferred assets	974		1,000
Non-current contract assets(1)	103		72
Non-current other deferred assets(1)	105		96
Total contract and other deferred assets	$	1,183	$	1,168

(1)Non-current contract and other deferred assets are recognized within All other non-current assets in the Consolidated Statements of Financial Position.

Capitalized costs to obtain a contract were $217 million and $213 million as of December 31, 2024 and 2023, respectively. Generally, these costs are recognized within two years of being capitalized. When recognized, the costs to obtain a contract are recorded within SG&A in the Consolidated and Combined Statements of Income.

CONTRACT LIABILITIES.

Contract liabilities include customer advances and deposits received when orders are placed and billed in advance of completion of performance obligations. Contract liabilities are classified as current or non-current based on the periods over which these remaining performance obligations are expected to be satisfied with our customers.

As of December 31, 2024 and 2023, contract liabilities were approximately $2,629 million and $2,623 million, respectively, of which the non-current portion of $686 million and $705 million, respectively, was recognized in All other non-current liabilities in the Consolidated Statements of Financial Position. Revenue recognized related to the contract liabilities balance at the beginning of the year was approximately $1,585 million and $1,554 million for the years ended December 31, 2024 and 2023, respectively.

REMAINING PERFORMANCE OBLIGATIONS.

Remaining performance obligations (“RPO”) represents the estimated revenue expected from customer contracts that are partially or fully unperformed inclusive of amounts deferred in contract liabilities, excluding contracts, or portions thereof, that provide the customer with the right to cancel or terminate without incurring a substantive penalty.

	As of
	December 31, 2024		December 31, 2023
Products	$	4,755	$	4,930
Services	9,737		9,725
Total RPO	$	14,491	$	14,655

We expect to recognize substantially all of the revenue for our product-related RPO within two years and services-related RPO within five years.