CONTRACT AND OTHER DEFERRED ASSETS & PROGRESS COLLECTIONS AND DEFERRED INCOME

9 Months Ended

Sep. 30, 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 $1,230 million in the nine months ended September 30, 2020. Our long-term service agreements decreased primarily due to billings of $6,373 million and a net unfavorable change in estimated profitability of $940 million at Aviation and $122 million at Power, offset by revenues recognized of $6,563 million. The decrease in long-term service agreements at Aviation included a $536 million pre-tax charge to reflect the cumulative impacts of changes to billing and cost assumptions for certain long-term service agreements, reflecting lower engine utilization, anticipated customer fleet restructuring and contract modifications. Additional adjustments could occur in future periods and could be material for certain long-term service agreements if actual customer operating behavior differs significantly from Aviation's current estimates.


September 30, 2020 (In millions)	Power		Aviation		Renewable Energy		Healthcare		Other		Total
Revenues in excess of billings	$	5,282	$	4,147	$	—	$	—	$	—	$	9,429
Billings in excess of revenues	(1,566)		(3,754)		—		—		—		(5,320)
Long-term service agreements(a)	3,716		394		—		—		—		4,110
Short-term and other service agreements	138		300		94		182		30		744
Equipment contract revenues(b)	2,667		77		1,164		308		181		4,397
Total contract assets	6,521		770		1,259		490		211		9,251

Deferred inventory costs	898		496		1,001		353		—		2,748
Nonrecurring engineering costs	22		2,384		39		33		—		2,478
Customer advances and other(c)	—		1,127		—		—		(32)		1,094
Contract and other deferred assets	$	7,441	$	4,776	$	2,299	$	876	$	179	$	15,571


December 31, 2019 (In millions)	Power		Aviation		Renewable Energy		Healthcare		Other		Total
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 $1,858 million and $1,712 million as of September 30, 2020 and December 31, 2019, respectively. The corresponding discount is recorded within liabilities as Deferred income and amounted to $294 million and $308 million as of September 30, 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 $850 million and $909 million as of September 30, 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 $947 million and $986 million as of September 30, 2020 and December 31, 2019, respectively. The corresponding discount is recorded within liabilities as Deferred income and amounted to $264 million and $256 million as of September 30, 2020 and December 31, 2019, respectively.

Progress collections and deferred income decreased $1,012 million primarily due to the timing of revenue recognition in excess of new collections received, primarily at Renewable Energy and Power. These decreases were partially offset by early payments received at our Aviation Military equipment business of $708 million in the second quarter 2020 as part of the U.S. Department of Defense's efforts to support vendors in its supply chain during the pandemic.

Revenues recognized for contracts included in liability position at the beginning of the year were $10,383 million and $9,565 million for the nine months ended September 30, 2020 and 2019, respectively.


September 30, 2020 (In millions)	Power		Aviation		Renewable Energy		Healthcare		Other		Total
Progress collections on equipment contracts	$	5,142	$	157	$	1,255	$	—	$	—	$	6,554
Other progress collections	426		5,069		3,141		370		154		9,160
Total progress collections	5,568		5,226		4,396		370		154		15,714
Deferred income(a)	128		1,565		378		1,780		118		3,969
GE Progress collections and deferred income	$	5,696	$	6,791	$	4,773	$	2,150	$	272	$	19,683


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 $558 million and $564 million as of September 30, 2020 and December 31, 2019, respectively.