CONTRACT ASSETS



(In millions)	September 30, 2017		December 31, 2016

GE
Revenues in excess of billings
Long-term product service agreements(a)	$	15,358	$	12,752
Long-term equipment contract revenues(b)	7,187		5,859
Total revenues in excess of billings	22,545		18,611

Deferred inventory costs(c)	3,818		3,349
Non-recurring engineering costs(d)	2,345		2,185
Other	1,101		1,018
Contract assets	$	29,809	$	25,162


(a)	Long-term product service agreement balances are presented net of related billings in excess of revenues of $2,595 million and $3,750 million at September 30, 2017 and December 31, 2016, respectively.


(b)	Reflects revenues earned in excess of billings on our long-term contracts to construct technically complex equipment (such as gas power systems).


(c)	Represents cost deferral for shipped goods (such as components for wind turbine assembly within our Renewable Energy segment) and other costs for which the revenue recognition criteria has not yet been met.


(d)	Includes costs incurred prior to production (such as requisition engineering) for long-term equipment production contracts, primarily within our Aviation segment, which are allocated ratably to each unit produced.

Revenues in excess of billings increased $2,606 million and $1,328 million for our long-term service agreements and long-term equipment contracts, respectively. The increase in our long-term service agreements is due to a $1,930 million cumulative catch up adjustment driven by lower forecasted costs to complete these contracts as well as increased forecasted revenue and $676 million due to the timing of revenue recognized for work performed relative to billings and collections. Revenue in excess of billings for our long-term equipment contracts increased $1,328 million primarily due to the timing of revenue recognized for work performed relative to the timing of billings and collections. The remaining increase in contract assets of $712 million is primarily due an increase in deferred inventory costs and non-recurring engineering costs.

The change in estimated profitability within our long-term product service agreements in our Power, Aviation, Transportation, and Oil & Gas segments resulted in an adjustment of $649 million and $588 million for the three months ended September 30, 2017 and 2016, respectively, and $1,930 million and $1,714 million for the nine months ended September 30, 2017 and 2016, respectively, driven primarily by cost execution and increased productivity.