Revenue Recognition

12 Months Ended

Dec. 31, 2022

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Revenue Recognition

The Company recognizes revenue when control of the promised goods or services is transferred to the customer and in amounts that the Company expects to collect. The timing of revenue recognition takes into consideration the various shipping terms applicable to the Company’s sales. For most transactions, control passes in accordance with agreed upon delivery terms.

The Company delivers products to company-owned stores, home centers and other regional or national consumer retail outlets, paint dealers, concessionaires and independent distributors, company-owned distribution networks, and directly to manufacturing companies and retail customers. Each product delivered to a third party customer is considered to satisfy a performance obligation. Performance obligations generally occur at a point in time and are satisfied when control of the goods passes to the customer. The Company is entitled to collection of the sales price under normal credit terms in the regions in which it operates. Accounts receivable are recognized when there is an unconditional right to consideration. Payment terms vary from customer to customer, depending on creditworthiness, prior payment history and other considerations.

The Company also provides services by applying coatings to customers' manufactured parts and assembled products and by providing technical support to certain customers. Performance obligations are satisfied over time as critical milestones are met and as services are provided. PPG is entitled to payment as the services are rendered. For the years ended December 31, 2022, 2021 and 2020, service revenue constituted less than 5% of total revenue.

Net sales by segment and region for the years ended December 31, 2022, 2021 and 2020 were as follows:

($ in millions)	2022	2021	2020
Performance Coatings
United States and Canada	$4,718	$4,366	$3,673
EMEA	3,550	3,582	2,861
Asia Pacific	1,118	1,254	1,015
Latin America	1,308	1,131	946
Total	$10,694	$10,333	$8,495
Industrial Coatings
United States and Canada	$2,666	$2,310	$1,995
EMEA	1,908	1,854	1,467
Asia Pacific	1,705	1,723	1,416
Latin America	679	582	461
Total	$6,958	$6,469	$5,339
Total Net Sales(1)
United States and Canada(2)	$7,384	$6,676	$5,668
EMEA	5,458	5,436	4,328
Asia Pacific	2,823	2,977	2,431
Latin America	1,987	1,713	1,407
Total PPG	$17,652	$16,802	$13,834

(1)Net sales to external customers are attributed to geographic regions based upon the location of the operating unit shipping the product.

(2)Net sales recognized in the United States represented 38%, 36%, and 37% of the Company’s total Net sales for the years ended December 31, 2022, 2021 and 2020, respectively.

Allowance for Doubtful Accounts

All trade receivables are reported on the consolidated balance sheet at the outstanding principal amount adjusted for any allowance for doubtful accounts and any charge-offs. PPG provides an allowance for doubtful accounts to reduce trade receivables to their estimated net realizable value equal to the amount that is expected to be collected. This allowance is estimated based on historical collection experience, current regional economic and market conditions, the aging of accounts receivable, assessments of current creditworthiness of customers and forward-looking information. The use of forward-looking information is based on certain macroeconomic and microeconomic indicators including, but not limited to, regional business environment risk, political risk, and commercial and financing risks.

PPG reviews its allowance for doubtful accounts on a quarterly basis to ensure the estimate reflects regional risk trends as well as current and future global operating conditions.

The following table summarizes allowance for doubtful accounts activity for the years ended December 31, 2022 and 2021:

	Trade Receivables Allowance for Doubtful Accounts
($ in millions)	2022	2021
January 1	$31	$44
Bad debt expense	52	19
Recoveries of previously reserved trade receivables	(55)	(14)
Other	3	(18)
December 31	$31	$31

In the first quarter 2022, PPG recorded a bad debt reserve of $43 million associated with the adverse economic impacts of the Russian invasion of Ukraine. Subsequently, the Company released a portion of this previously established bad debt reserve due to the collection of certain trade receivables, resulting in a bad debt reserve related to PPG's operations in Russia of $11 million at December 31, 2022. Refer to Note 7, "Impairment and Other Related Charges, Net" for additional information.