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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:



	Successor
	Reported Balances as of December 31, 2018		Impact of ASC 606		ASC 605 Historical Adjusted Balances
	(Dollars in millions)
Operating revenue	$	8,220	(5	)	8,215
Cost of services and products (exclusive of depreciation and amortization)	3,937		—		3,937
Selling, general and administrative	1,354		52		1,406
Interest expense	509		(9	)	500
Income tax expense	196		(12	)	184
Net income	341		(36	)	305

Disaggregation of revenue

The following tabled provide disaggregation of revenue from contracts with customers based on service offering 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⁽⁶⁾		Total Revenue from Contracts with Customers
	(Dollars in millions)
IP and Data Services ⁽¹⁾	$	3,888	—		3,888
Transport and Infrastructure ⁽²⁾	2,662		(704	)	1,958
Voice and Collaboration ⁽³⁾	1,443		—		1,443
Other Revenue ⁽⁴⁾	12		(9	)	3
Affiliate Revenue ⁽⁵⁾	180		(180	)	—
Total Revenue	$	8,185	(893	)	7,292

Timing of revenue
Goods transferred at a point in time					$	—
Services performed over time					7,292
Total revenue from contracts with customers					$	7,292



	Year Ended December 31, 2018
	(Dollars in millions)
	Total Revenue		Adjustments for Non-ASC 606 Revenue⁽⁶⁾		Total Revenue from Contracts with Customers
IP and Data Services ⁽¹⁾	$	3,945	—		3,945
Transport and Infrastructure ⁽²⁾	2,701		(189	)	2,512
Voice and Collaboration ⁽³⁾	1,464		—		1,464
Other Revenue ⁽⁴⁾	3		(3	)	—
Affiliate Revenue ⁽⁵⁾	107		(107	)	—
Total Revenue	$	8,220	(299	)	7,921

Timing of revenue
Goods transferred at a point in time					$	—
Services performed over time					7,921
Total revenue from contracts with customers					$	7,921

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(1)	Includes primarily VPN data network, IP, Ethernet, video and ancillary revenue.
(2)	Includes primarily wavelength, colocation and data center services, dark fiber, private line and professional services revenue.
(3)	Includes voice, Voice Over IP ("VoIP"), Collaboration.
(4)	Includes sublease rental income and IT services and managed services revenue.
(5)	Includes telecommunications and data services we bill to our affiliates.
(6)	Includes sublease rental income and revenue from fiber capacity lease arrangements which are not within the scope of ASC 606.

Contract with customer, asset and liability

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⁾	$	678	712
Contract assets	32		19
Contract liabilities	423		393

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(1)	Gross customer receivables of $691 million and $723 million, net of allowance for doubtful accounts of $13 million and $11 million, at December 31, 2019 and December 31, 2018, respectively.

Capitalized contract cost

The following tables provide changes in our contract acquisition costs and fulfillment costs for the years ended:



	Year Ended December 31, 2019
	Acquisition Costs			Fulfillment Costs
	(Dollars in millions)
Beginning of period balance	$	64		84
Costs incurred	60			103
Amortization	(45		)	(66	)
End of period balance	$	79		121



	Year Ended December 31, 2018
	Acquisition Costs			Fulfillment Costs
	(Dollars in millions)
Beginning of period balance	$	13		14
Costs incurred	68			99
Amortization	(17		)	(29	)
End of period balance	$	64		84