Revenue Recognition

3 Months Ended

Mar. 31, 2023

Revenue from Contract with Customer [Abstract]

Revenue Recognition

NOTE 5. REVENUE RECOGNITION

Revenue Categories

The following tables set forth reported revenue by category and by business unit:

For the three months ended March 31, 2023
	Communications
	Mobility		Business Wireline		Consumer Wireline		Latin America		Corporate & Other		Total
Wireless service	$	15,483	$	—	$	—	$	591	$	—	$	16,074
Business service	—		5,200		—		—		—		5,200
Broadband	—		—		2,527		—		—		2,527
Legacy voice and data	—		—		396		—		83		479
Other	—		—		316		—		21		337
Total Service	15,483		5,200		3,239		591		104		24,617
Equipment	5,099		131		—		292		—		5,522
Total	$	20,582	$	5,331	$	3,239	$	883	$	104	$	30,139

For the three months ended March 31, 2022
	Communications
	Mobility		Business Wireline		Consumer Wireline		Latin America		Corporate & Other		Total
Wireless service	$	14,724	$	—	$	—	$	490	$	—	$	15,214
Business service	—		5,478		—		—		—		5,478
Broadband	—		—		2,355		—		—		2,355
Legacy voice and data	—		—		460		—		89		549
Other	—		—		346		—		57		403
Total Service	14,724		5,478		3,161		490		146		23,999
Equipment	5,351		162		—		200		—		5,713
Total	$	20,075	$	5,640	$	3,161	$	690	$	146	$	29,712

Deferred Customer Contract Acquisition and Fulfillment Costs

Costs to acquire and fulfill customer contracts, including commissions on service activations, for our Mobility, Business Wireline, and Consumer Wireline services, are deferred and amortized over the contract period or expected customer relationship life, which typically ranges from three years to five years.

The following table presents the deferred customer contract acquisition and fulfillment costs included on our consolidated balance sheets:

	March 31,		December 31,
Consolidated Balance Sheets	2023		2022
Deferred Acquisition Costs
Prepaid and other current assets	$	2,988	$	2,893
Other Assets	3,962		3,913
Total deferred customer contract acquisition costs	$	6,950	$	6,806
Deferred Fulfillment Costs
Prepaid and other current assets	$	2,433	$	2,481
Other Assets	4,133		4,206
Total deferred customer contract fulfillment costs	$	6,566	$	6,687

The following table presents deferred customer contract acquisition and fulfillment cost amortization included in “Other cost of revenue” for the three months ended:

	March 31,		March 31,
Consolidated Statements of Income	2023		2022
Deferred acquisition cost amortization	$	830	$	663
Deferred fulfillment cost amortization	678		664

Contract Assets and Liabilities

A contract asset is recorded when revenue is recognized in advance of our right to bill and receive consideration. The contract asset will decrease as services are provided and billed. For example, when installment sales include promotional discounts (e.g., “buy one get one free”), the difference between revenue recognized and consideration received is recorded as a contract asset to be amortized over the contract term.

Our contract assets primarily relate to our wireless businesses. Promotional equipment sales where we offer handset credits, which are allocated between equipment and service in proportion to their standalone selling prices, when customers commit to a

specified service period result in additional contract assets recognized. These contract assets will amortize over the service contract period, resulting in lower future service revenue.

When consideration is received in advance of the delivery of goods or services, a contract liability is recorded. Reductions in the contract liability will be recorded as we satisfy the performance obligations.

The following table presents contract assets and liabilities on our consolidated balance sheets:

	March 31,		December 31,
Consolidated Balance Sheets	2023		2022
Contract asset	$	5,812	$	5,512
Current portion in “Prepaid and other current assets”	3,058		2,941
Contract liability	4,158		4,170
Current portion in “Advanced billings and customer deposits”	3,818		3,816

Our contract asset balances for the quarter ended March 31, 2023 and December 31, 2022 reflect increased promotional equipment sales in our wireless business.

Our beginning of period contract liability recorded as customer contract revenue during 2023 was $2,821.

Remaining Performance Obligations

Remaining performance obligations represent services we are required to provide to customers under bundled or discounted arrangements, which are satisfied as services are provided over the contract term. In determining the transaction price allocated, we do not include non-recurring charges and estimates for usage, nor do we consider arrangements with an original expected duration of less than one year, which are primarily prepaid wireless and residential internet agreements.

Remaining performance obligations associated with business contracts reflect recurring charges billed, adjusted to reflect estimates for sales incentives and revenue adjustments. Performance obligations associated with wireless contracts are estimated using a portfolio approach in which we review all relevant promotional activities, calculating the remaining performance obligation using the average service component for the portfolio and the average device price. As of March 31, 2023, the aggregate amount of the transaction price allocated to remaining performance obligations was $36,722, of which we expect to recognize approximately 70% by the end of 2024, with the balance recognized thereafter.