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Revenue
 6 Months Ended
Apr. 30, 2021
Revenue from Contract with Customer [Abstract]  
Revenue RevenueWe account for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable.
Disaggregation of Revenue
The following tables disaggregate our external revenue by product type:
(in millions)TruckPartsGlobal OperationsFinancial
Services		Corporate
and
Eliminations		Total
Three Months Ended April 30, 2021
Truck products and services(A)
$1,240 $— $— $— $3 $1,243 
Truck contract manufacturing97 — — — — 97 
Used trucks102 — — — — 102 
Engines— 59 114 — — 173 
Parts1 464 15 — — 480 
Extended warranty contracts26 — — — — 26 
Sales of manufactured products, net1,466 523 129 — 3 2,121 
Retail financing(B)
— — — 38 (2)36 
Wholesale financing(B)
— — — 5 — 5 
Finance revenues— — — 43 (2)41 
Sales and revenues, net$1,466 $523 $129 $43 $1 $2,162 

(in millions)TruckPartsGlobal OperationsFinancial
Services		Corporate
and
Eliminations		Total
Six Months Ended April 30, 2021
Truck products and services(A)
$2,254 $— $— $— $5 $2,259 
Truck contract manufacturing206 — — — — 206 
Used trucks160 — — — — 160 
Engines— 109 187 — — 296 
Parts1 879 31 — — 911 
Extended warranty contracts58 — — — — 58 
Sales of manufactured products, net2,679 988 218 — 5 3,890 
Retail financing(B)
— — — 77 (4)73 
Wholesale financing(B)
— — — 11 — 11 
Finance revenues— — — 88 (4)84 
Sales and revenues, net$2,679 $988 $218 $88 $1 $3,974 
(in millions)TruckPartsGlobal OperationsFinancial
Services		Corporate
and
Eliminations		Total
Three Months Ended April 30, 2020
Truck products and services(A)
$1,257 $— $— $— $3 $1,260 
Truck contract manufacturing59 — — — — 59 
Used trucks42 — — — — 42 
Engines— 49 36 — — 85 
Parts1 393 11 — — 405 
Extended warranty contracts26 — — — — 26 
Sales of manufactured products, net1,385 442 47 — 3 1,877 
Retail financing(B)
— — — 41 (2)39 
Wholesale financing(B)
— — — 9 — 9 
Finance revenues— — — 50 (2)48 
Sales and revenues, net$1,385 $442 $47 $50 $1 $1,925 

(in millions)TruckPartsGlobal OperationsFinancial
Services		Corporate
and
Eliminations		Total
Six Months Ended April 30, 2020
Truck products and services(A)
$2,332 $— $— $— $6 $2,338 
Truck contract manufacturing156 — — — — 156 
Used trucks83 — — — — 83 
Engines— 99 83 — — 182 
Parts1 835 25 — — 861 
Extended warranty contracts51 — — — — 51 
Sales of manufactured products, net2,623 934 108 — 6 3,671 
Retail financing(B)
— — — 78 (4)74 
Wholesale financing(B)
— — — 18 — 18 
Finance revenues— — — 96 (4)92 
Sales and revenues, net$2,623 $934 $108 $96 $2 $3,763 
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(A)     Includes other markets primarily consisting of Bus, Export Truck and Mexico.
(B)     Retail financing revenues in the Financial Services segment include interest revenue of $15 million and $29 million for the three and six months ended April 30, 2021, respectively, and $17 million and $32 million for the three and six months ended April 30, 2020, respectively. Wholesale financing revenues in the Financial Services segment include interest revenue of $5 million and $11 million for the three and six months ended April 30, 2021, respectively, and $8 million and $18 million for the three and six months ended April 30, 2020, respectively.
Trucks, Truck Contract Manufacturing, Used Trucks, Engines and Parts
Revenue for our truck products and services, certain truck contract manufacturing, used trucks, certain engines and parts is recognized at a point in time when control is transferred to the customer. Our trucks, used trucks, engines, and parts have a standard warranty, the estimated cost of which is included in Costs of products sold.
Certain truck and other contract manufacturing arrangements are recognized over time. We recognize revenue over time when the finished assets have no alternative use and we have a right to payment for work performed in the event of a contract cancellation or when we create or enhance an asset that the customer controls as it is being created or enhanced. We recognize revenue using a cost-based input method because it best depicts our progress in satisfying the performance obligation. The selection of the method requires judgement and is based on the nature of the products or services to be provided.
An allowance for parts sales returns is recorded as a reduction to revenue based upon estimates using historical information about returns. This includes when we are a reseller of certain service parts that include a core component. A core component is the basic forging or casting, such as an engine block, that can be remanufactured by a certified remanufacturing supplier. When a dealer returns a core component within the specified eligibility period, we refund the core return deposit, which is applied to the customer's account balance.
Extended Warranty Contracts
We sell separately-priced extended warranty contracts that can be purchased for periods ranging from one to ten years. Warranty revenue related to extended warranty contracts is recognized over the life of the contract in proportion to the costs expected to be incurred in satisfying the obligation under the contract. Costs under extended warranty contracts are expensed as incurred. We recognize losses on defined pools of extended warranty contracts when the remaining expected costs for a given pool of contracts exceed the related deferred revenue.
Retail and Wholesale Financing
Financial Services operations recognize revenue from retail notes, finance leases, wholesale notes, retail accounts, and wholesale accounts as Finance revenues over the term of the receivables utilizing the effective interest method. Certain direct origination costs and fees are deferred and recognized as adjustments to yield and are reported as part of interest income over the life of the receivable. Loans are impaired when we conclude it is probable the customer will not be able to make full payment according to contractual terms after reviewing the customer's financial performance, payment ability, capital-raising potential, management style, economic situation, and other factors. The accrual of interest on such loans is suspended when the loan becomes 90 days or more past due. Finance revenues on these loans are recognized only to the extent cash payments are received. We resume accruing interest on these accounts when payments are current according to the terms of the loans and future payments are reasonably assured.
Operating lease revenues are recognized on a straight-line basis over the life of the lease. Recognition of revenue is suspended when management determines the collection of future revenue is not probable. Recognition of revenue is resumed if collection again becomes probable.
Performance Obligations
Generally, revenue from our sales is recognized at a point in time when control is transferred to the customer which generally occurs upon shipment from our plants and distribution centers or at the time of delivery to our customers. The standard payment term is less than 30 days, but we may extend payment terms on selected receivables. We have elected the practical expedient that allows the Company to not assess whether a contract has a significant financing component when the time between cash collection and transfer of control is less than one year.
We recognize price allowances, returns and the cost of incentive programs in the normal course of business based on programs offered to dealers or fleet customers. Estimates are made for sales incentives on certain vehicles in dealer stock inventory based on historical experience and announced special programs. The estimated sales incentives and returns are adjusted at the earlier of when the estimate of consideration we expect to receive changes or the consideration becomes fixed. For contracts where there is more than one performance obligation, discounts are allocated to all of the performance obligations in the contract based on their relative standalone selling prices.
Truck sales arrangements with U.S. fleet customers are often complex and non-standard, and may include pricing allowances and other sales incentives, such as rebates, financing incentives, trade allowances and residual value guarantees, for which losses are generally capped. Truck sales to fleet customers are recognized in accordance with the terms of each contract. In certain arrangements, the evaluation of financing incentives and residual value guarantees may result in the transaction being recorded as an operating lease, as we retain control in the leased property. Concurrent with our recognition of revenue, we recognize price allowances and the cost of incentive programs in the normal course of business based on programs offered to our fleet customers.
Revenue on bill and hold arrangements is not recognized until after the customer is notified that the product (i) has been completed according to customer specifications, (ii) has passed our quality control inspections, (iii) is ready for physical transfer to the customer and (iv) the reason for the bill and hold arrangement is substantive.
We have elected to account for shipping and handling activities that occur subsequent to transfer of control as a fulfillment cost and not as a separate performance obligation. The costs are recognized as an expense in Costs of products sold when control of the related performance obligation has transferred to the customer. We do not disclose the transaction price related to order backlogs as they have an original expected duration of less than one year.
We exclude from revenue any sales taxes, value added taxes and other related taxes collected from customers.
The impact of changes to revenue related to performance obligations satisfied in prior periods was not material to our consolidated financial statements in the second quarter of 2021.
Contract Balances
Most of our contracts are for a period of less than one year. We have certain long-term contract manufacturing and extended warranty contracts that extend beyond one year. We record deferred revenue, primarily related to extended warranty contracts, when we receive consideration from a customer prior to transferring goods or services under the terms of a sales contract. This deferred revenue represents contract liabilities which are included in our Consolidated Balance Sheets as components of current and long-term liabilities. The amount of manufacturing contract liabilities as of both April 30, 2021 and October 31, 2020 was not material to our consolidated financial statements.
The amount of deferred revenue related to extended warranty contracts was $229 million and $245 million at April 30, 2021 and October 31, 2020, respectively. Revenue recognized under our extended warranty programs was $26 million and $58 million for the three and six months ended April 30, 2021, respectively, and $26 million and $51 million for the three and six months ended April 30, 2020, respectively. We expect to recognize revenue under our extended warranty programs of approximately $47 million in the remainder of 2021, $82 million in 2022, $53 million in 2023, $26 million in 2024, $12 million in 2025, and an aggregate amount of $9 million thereafter.
Contract Costs
We recognize incremental costs to obtain contracts as an asset if they are recoverable. We recognize the costs of obtaining a contract as an expense when the related contract period is less than one year. Contract costs capitalized were immaterial as of April 30, 2021 and October 31, 2020, respectively.