REVENUE (Notes)

3 Months Ended

Mar. 31, 2020

Revenue from Contract with Customer [Abstract]

Revenue from Contract with Customer [Text Block]

REVENUE

Revenue Recognition

The majority of Dow's revenue is derived from product sales. In the three months ended March 31, 2020, 99 percent of Dow's revenue related to product sales (99 percent for the three months ended March 31, 2019), with the remaining balance primarily related to the Company's insurance operations and licensing of patents and technologies. Product sales consist of sales of Dow's products to manufacturers and distributors and considers order confirmations or purchase orders, which in some cases are governed by master supply agreements, to be contracts with a customer. Dow enters into licensing arrangements in which it licenses certain rights of its patents and technology to customers. Revenue from Dow’s licenses for patents and technology is derived from sales-based royalties and licensing arrangements based on billing schedules established in each contract.

Remaining Performance Obligations

Remaining performance obligations represent the transaction price allocated to unsatisfied or partially unsatisfied performance obligations. At March 31, 2020, Dow had unfulfilled performance obligations of $829 million ($826 million at December 31, 2019) related to the licensing of technology. Dow expects revenue to be recognized for the remaining performance obligations over the next seven years.

The remaining performance obligations are for product sales that have expected durations of one year or less, product sales of materials delivered through a pipeline for which Dow has elected the right to invoice practical expedient, or variable consideration attributable to royalties for licenses of patents and technology. Dow has received advance payments from customers related to long-term supply agreements that are deferred and recognized over the life of the contract, with remaining contract terms that range up to 21 years. Dow will have rights to future consideration for revenue recognized when product is delivered to the customer. These payments are included in "Accrued and other current liabilities" and "Other noncurrent obligations" in the consolidated balance sheets.

Disaggregation of Revenue

Dow disaggregates its revenue from contracts with customers by operating segment and business, as the Company believes it best depicts the nature, amount, timing and uncertainty of its revenue and cash flows.

Net Trade Sales by Segment and Business	Three Months Ended
In millions	Mar 31, 2020		Mar 31, 2019
Hydrocarbons & Energy	$	1,219	$	1,404
Packaging and Specialty Plastics	3,390		3,734
Packaging & Specialty Plastics	$	4,609	$	5,138
Industrial Solutions	$	1,054	$	1,127
Polyurethanes & Construction Chemicals	1,988		2,350
Other	3		3
Industrial Intermediates & Infrastructure	$	3,045	$	3,480
Coatings & Performance Monomers	$	828	$	902
Consumer Solutions	1,237		1,380
Performance Materials & Coatings	$	2,065	$	2,282
Corporate	$	51	$	69
Total	$	9,770	$	10,969

Net Trade Sales by Geographic Region	Three Months Ended
In millions	Mar 31, 2020		Mar 31, 2019
U.S. & Canada	$	3,550	$	3,933
EMEAI 1	3,411		3,882
Asia Pacific	1,845		2,101
Latin America	964		1,053
Total	$	9,770	$	10,969

1. Europe, Middle East, Africa and India.

Contract Assets and Liabilities

Dow receives payments from customers based upon contractual billing schedules. Accounts receivable are recorded when the right to consideration becomes unconditional. Contract assets include amounts related to Dow's contractual right to consideration for completed performance obligations not yet invoiced. Contract liabilities include payments received in advance of performance under the contract and are recognized in revenue when the performance obligations are met. "Contract liabilities - current" primarily reflects deferred revenue from prepayments from customers for product to be delivered in 12 months or less. "Contract liabilities - noncurrent" includes advance payments that the Company has received from customers related to long-term supply agreements and royalty payments that are deferred and recognized over the life of the contract.

Revenue recognized in the first three months of 2020 from amounts included in contract liabilities at the beginning of the period was approximately $35 million (approximately $55 million in the first three months of 2019). In the first three months of 2020, the amount of contract assets reclassified to receivables as a result of the right to the transaction consideration becoming unconditional was approximately $10 million ($15 million in the first three months of 2019).

The following table summarizes the contract assets and liabilities at March 31, 2020 and December 31, 2019:

Contract Assets and Liabilities	Mar 31, 2020		Dec 31, 2019
In millions
Accounts and notes receivable - Trade	$	4,841	$	4,844
Contract assets - current 1	$	22	$	41
Contract assets - noncurrent 2	$	17	$	4
Contract liabilities - current 3	$	196	$	193
Contract liabilities - noncurrent 4	$	1,602	$	1,607

1. Included in "Other current assets" in the consolidated balance sheets.

2. Included in "Deferred charges and other assets" in the consolidated balance sheets.

3. Included in "Accrued and other current liabilities" in the consolidated balance sheets.

4. Included in "Other noncurrent obligations" in the consolidated balance sheets.