Contract Assets and Liabilities

3 Months Ended

Mar. 31, 2018

Contract Assets And Liabilities

Contract Assets and Liabilities

12. Contract Assets and Liabilities

Beginning in 2018, Contract assets includes unbilled amounts typically resulting from sales under contracts when the cost-to-cost method of revenue recognition is utilized, and revenue recognized exceeds the amount billed to the customer. For periods prior to 2018, that asset was included in Accounts receivable. At the date of adoption of ASC 606, we recorded Contract assets of $44.9 million, which included the amount that was in Accounts receivable as of December 31, 2017, and additional transition adjustments that resulted from the retrospective application of ASC 606 to contracts in process at the time of adoption.

Contract assets are transferred to Accounts receivable, net when the entitlement to pay becomes unconditional. Contract liabilities include advance payments and billings in excess of revenue recognized. Contract liabilities are included in Accrued liabilities in the Consolidated Balance Sheet.

Contract assets and Contract liabilities are reported on the Consolidated Balance Sheets in a net position on a contract-by-contract basis at the end of each reporting period. Contract assets and contract liabilities were as follows:

(in thousands)	March 31, 2018	December 31, 2017
Contract assets	$42,895	$   -
Contract liabilities	3,030	-

Contract assets decreased $2.0 million during the quarter ended March 31, 2018 as compared to the January 1, 2018 opening balance sheet, as adjusted for the adoption of ASC 606 (see Note 2).

The decrease was primarily due to an increase in amounts billed to customers, in excess of the recognition of unbilled revenue related to the satisfaction or partial satisfaction of performance obligations. There were no significant impairment losses related to our Contract assets during the quarter ended March 31, 2018.

Contract liabilities increased $2.3 million during the quarter ended March 31, 2018, as compared to the January 1, 2018 opening balance sheet, as adjusted for the adoption of ASC 606, primarily due to increased billings in excess of revenue recognized. Revenue recognized for the three-month period ended March 31, 2018, that was included in the Contract liability balance at the beginning of the year was less than $1 million, and represented revenue primarily in the ASC reporting unit.