Supplemental Financial Information

9 Months Ended

Sep. 30, 2020

Supplemental Financial Information [Abstract]

SUPPLEMENTAL FINANCIAL INFORMATION

17. SUPPLEMENTAL FINANCIAL INFORMATION

The components of accounts receivable are summarized as follows:

In millions	September 30, 2020		December 31, 2019
Accounts receivable
Trade	$	1,260	$	1,482
Other	43		52
Accounts receivable, gross	1,303		1,534
Less: allowance for credit losses	(55)		(44)
Total accounts receivable, net	$	1,248	$	1,490

Accounts receivable, net includes amounts billed and currently due from customers, as well as amounts unbilled that typically result from sales under contracts where revenue recognized exceeds the amount billed to the customer and where the Company has an unconditional right to consideration. The amounts due are stated at their net estimated realizable value.

Allowances for credit losses on accounts receivable are recognized when reasonable and supportable forecasts affect the expected collectability. This requires us to make our best estimate of the current expected losses inherent in our accounts receivable at each balance sheet date. These estimates require consideration of historical loss experience, adjusted for current conditions, forward looking indicators, trends in customer payment frequency and judgments about the probable effects of relevant observable data, including present and future economic conditions and the financial health of specific customers and market sectors. This policy is applied consistently among all of our operating segments.

Our allowance for credit losses as of September 30, 2020 and December 31, 2019 was $55 million and $44 million, respectively. Our allowance for credit losses charged to expense for the three and nine months ended September 30, 2020 was $7 million and $26 million, respectively. We increased our allowance for credit losses for the three and nine months ended September 30, 2020 by $3 million and $9 million, respectively, based upon current forecasts that reflect increased economic uncertainty resulting from the COVID-19 pandemic. The Company recorded write-offs against the reserve for the three and nine months ended September 30, 2020 of $5 million and $11 million, respectively.

The components of inventory are summarized as follows:

In millions	September 30, 2020		December 31, 2019
Inventories
Work in process and raw materials	$	179	$	204
Finished goods	175		184
Service parts	394		396
Total inventories	$	748	$	784