Revenue Recognition (Tables)

12 Months Ended

Dec. 31, 2019

Revenue from Contract with Customer [Abstract]

Schedule of new accounting pronouncements and changes in accounting principles

The following tables present our reported results under ASC 606 and a reconciliation to results using the historical accounting method:



	Year Ended December 31, 2018
	Reported Balances		Impact of ASC 606		ASC 605 Historical Adjusted Amount
	(Dollars in millions)
Operating revenue	$	8,493	6		8,499
Cost of services and products (exclusive of depreciation and amortization)	2,767		17		2,784
Selling, general and administrative	799		—		799
Income tax expense	494		(3	)	491
Net income	1,665		(8	)	1,657

Schedule of disaggregated revenue by service offering

The following tables provide disaggregation of revenue from contracts with customers based on service offerings for the years ended December 31, 2019 and 2018. It also shows the amount of revenue that is not subject to ASC 606, but is instead governed by other accounting standards.



	Year Ended December 31, 2019
	Total Revenue		Adjustments for Non-ASC 606 Revenue⁽⁷⁾		Total Revenue from Contracts with Customers
	(Dollars in millions)
IP and data services ⁽¹⁾	$	624	—		624
Transport and infrastructure ⁽²⁾	2,829		(308	)	2,521
Voice and collaboration ⁽³⁾	1,639		—		1,639
IT and managed services ⁽⁴⁾	3		—		3
Regulatory revenue ⁽⁵⁾	189		(189	)	—
Affiliate revenue ⁽⁶⁾	2,873		—		2,873
Total revenue	$	8,157	(497	)	7,660

Timing of revenue
Goods and services transferred at a point in time					54
Services performed over time					7,606
Total revenue from contracts with customers					7,660



	Year Ended December 31, 2018
	Total Revenue		Adjustments for Non-ASC 606 Revenue⁽⁷⁾		Total Revenue from Contracts with Customers
	(Dollars in millions)
IP and data services ⁽¹⁾	$	615	—		615
Transport and infrastructure⁽²⁾	2,925		(317	)	2,608
Voice and collaboration ⁽³⁾	1,798		—		1,798
IT and managed services ⁽⁴⁾	6		—		6
Regulatory revenue ⁽⁵⁾	214		(214	)	—
Affiliate revenue⁽⁶⁾	2,935		—		2,935
Total revenue	$	8,493	(531	)	7,962

Timing of revenue
Goods and services transferred at a point in time					$	69
Services performed over time					7,893
Total revenue from contracts with customers					$	7,962

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(1	)	Includes primarily VPN data networks, Ethernet, IP and other ancillary services
(2	)	Includes primarily broadband, private line (including business data services) and other ancillary services.
(3	)	Includes local voice, including wholesale voice, and other ancillary services.
(4	)	Includes IT services and managed services revenue.
(5	)	Includes CAF II and federal and state USF support revenue.
(6	)	Includes telecommunications and data services we bill to our affiliates.
(7	)	Includes regulatory revenue, lease revenue, sublease rental income, which are not within the scope of ASC 606.

Schedule of customer receivables and contract balances

The following table provides balances of customer receivables, contract assets and contract liabilities as of December 31, 2019 and December 31, 2018:



	December 31, 2019		December 31, 2018
	(Dollars in millions)
Customer receivables ⁽¹⁾	$	430	518
Contract liabilities	338		207
Contract assets	18		64

(1)

Gross customer receivables of $462 million and $554 million, net of allowance for doubtful accounts of $32 million and $36 million, at December 31, 2019 and December 31, 2018, respectively.

Schedule of contract costs

The following table provides changes in our contract acquisition costs and fulfillment costs:



	Year Ended December 31, 2019
	Acquisition Costs			Fulfillment Costs
	(Dollars in millions)
Beginning of period balance	$	90		57
Costs incurred	60			39
Amortization	(64		)	(32	)
End of period balance	$	86		64



	Year Ended December 31, 2018
	Acquisition Costs			Fulfillment Costs
	(Dollars in millions)
Beginning of period balance	$	91		61
Costs incurred	62			27
Amortization	(63		)	(31	)
End of period balance	$	90		57