CONTRACT AND OTHER DEFERRED ASSETS & PROGRESS COLLECTIONS AND DEFERRED INCOME

3 Months Ended

Mar. 31, 2020

CONTRACT AND OTHER DEFERRED ASSETS & PROGRESS COLLECTIONS AND DEFERRED INCOME

NOTE 10. CONTRACT AND OTHER DEFERRED ASSETS & PROGRESS COLLECTIONS AND DEFERRED INCOME

Contract and other deferred assets decreased $665 million in 2020. Our long-term service agreements decreased primarily due to billings of $2,544 million and a net unfavorable change in estimated profitability of $193 million at Aviation and $72 million at Power, offset by revenues recognized of $2,688 million. The change in estimated profitability at Aviation included a $100 million non-cash pre-tax charge (reduction in revenues and profit) to reflect the cumulative impacts of changes to assumptions for certain long-term service agreements. Additional adjustments are likely to occur in future periods and could be material as conditions related to COVID-19 continue to evolve.



March 31, 2020 (In millions)	Power			Aviation			Renewable Energy		Healthcare		Other			Total

Revenues in excess of billings	$	5,197		$	4,909		$	—	$	—	$	—		$	10,106
Billings in excess of revenues	(1,586		)	(3,660		)	—		—		—			(5,247		)
Long-term service agreements(a)	3,611			1,248			—		—		—			4,859
Short-term and other service agreements	155			389			33		174		45			795
Equipment contract revenues(b)	2,425			60			1,185		278		133			4,081
Total contract assets	6,191			1,696			1,217		452		178			9,735

Deferred inventory costs	887			481			1,148		342		1			2,859
Nonrecurring engineering costs	49			2,306			43		33		—			2,431
Customer advances and other(c)	—			1,143			—		—		(32		)	1,111
Contract and other deferred assets	$	7,127		$	5,627		$	2,409	$	827	$	146		$	16,136



December 31, 2019 (In millions)

Revenues in excess of billings	$	5,342		$	4,996		$	—	$	—	$	—		$	10,338
Billings in excess of revenues	(1,561		)	(3,719		)	—		—		—			(5,280		)
Long-term service agreements(a)	3,781			1,278			—		—		—			5,058
Short-term and other service agreements	190			316			43		169		—			717
Equipment contract revenues(b)	2,508			82			1,217		324		106			4,236
Total contract assets	6,478			1,675			1,260		492		106			10,011

Deferred inventory costs	943			287			1,677		359		—			3,267
Nonrecurring engineering costs	44			2,257			47		35		8			2,391
Customer advances and other(c)	—			1,165			—		—		(32		)	1,133
Contract and other deferred assets	$	7,465		$	5,384		$	2,985	$	886	$	82		$	16,801

(a)

Included amounts due from customers at Aviation for the sales of engines, spare parts and services, which we will collect through higher usage-based fees from servicing equipment under long-term service agreements, totaling $1,777 million and $1,712 million as of March 31, 2020 and December 31, 2019, respectively. The corresponding discount is recorded within liabilities as Deferred income and amounted to $332 million and $308 million as of March 31, 2020 and December 31, 2019, respectively.


(b)	Included are amounts due from customers at Power for the sale of services upgrades, which we collect through incremental fixed or usage-based fees from servicing the equipment under long-term service agreements, totaling $877 million and $909 million as of March 31, 2020 and December 31, 2019, respectively.

(c)

Included advances to and amounts due from customers at Aviation for the sale of engines, spare parts and services, which we will collect through incremental fees for goods and services to be delivered in future periods, totaling $961 million and $986 million as of March 31, 2020 and December 31, 2019, respectively. The corresponding discount is recorded within liabilities as Deferred income and amounted to $268 million and $256 million as of March 31, 2020 and December 31, 2019, respectively.

Progress collections and deferred income decreased $708 million in the first quarter of 2020 primarily due to the timing of revenue recognition in excess of new collections received, primarily at Power and Renewable Energy. These decreases were partially offset by milestone payments received, primarily at Aviation.

Revenues recognized for contracts included in liability position at the beginning of the year were $3,898 million and $4,608 million for the three months ended March 31, 2020 and 2019, respectively.



March 31, 2020 (In millions)	Power		Aviation		Renewable Energy		Healthcare		Other		Total

Progress collections on equipment contracts	$	5,418	$	144	$	1,146	$	—	$	—	$	6,709
Other progress collections	317		4,791		3,999		312		170		9,589
Total progress collections	5,735		4,935		5,145		312		170		16,298
Deferred income(a)	41		1,569		316		1,654		109		3,689
GE Progress collections and deferred income	$	5,776	$	6,504	$	5,461	$	1,966	$	279	$	19,986



December 31, 2019 (In millions)

Progress collections on equipment contracts	$	5,857	$	115	$	1,268	$	—	$	—	$	7,240
Other progress collections	413		4,748		4,193		305		189		9,849
Total progress collections	6,270		4,863		5,461		305		189		17,089
Deferred income(a)	49		1,528		284		1,647		98		3,606
GE Progress collections and deferred income	$	6,319	$	6,391	$	5,745	$	1,952	$	287	$	20,694

(a)

Included in this balance are finance discounts associated with customer advances at Aviation of $600 million and $564 million as of March 31, 2020 and December 31, 2019, respectively.