Revenue Recognition

9 Months Ended

Sep. 30, 2019

Revenue from Contract with Customer [Abstract]

Note 2 Revenue Recognition

Disaggregation of Revenue

In the following table, revenue is disaggregated by type of service and timing of revenue recognition. Service revenues are recognized over time and Equipment sales are point in time.



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
(Dollars in millions)
Revenues from contracts with customers:
Retail service	$	663	$	659	$	1,984	$	1,960
Inbound roaming	54		50		132		116
Other service	34		34		101		99
Service revenues from contracts with customers	751		743		2,217		2,175
Equipment sales	257		242		698		692
Total revenues from contracts with customers¹	$	1,008	$	985	$	2,915	$	2,867


¹	Revenue line items in this table will not agree to amounts presented in the Consolidated Statement of Operations as the amounts in this table only include revenue resulting from contracts with customers.

Contract Balances

The accounts receivable balance related to amounts billed and not paid on contracts with customers, net of allowances, is shown in the table below.



	September 30, 2019		December 31, 2018
(Dollars in millions)
Accounts receivable
Customer and agents	$	899	$	908
Roaming	34		20
Other	56		32
Total¹	$	989	$	960


¹	Accounts receivable line items presented in this table will not agree to amounts presented in the Consolidated Balance Sheet as the amounts in this table only include receivables resulting from contracts with customers.

The following table provides a rollforward of contract assets from contracts with customers, which are recorded in Other current assets and Other assets and deferred charges in the Consolidated Balance Sheet.



	Contract Assets
(Dollars in millions)
Balance at December 31, 2018	$	9
Contract additions	9
Reclassified to receivables	(11		)
Balance at September 30, 2019	$	7

The following table provides a rollforward of contract liabilities from contracts with customers, which are recorded in Customer deposits and deferred revenues and Other deferred liabilities and credits in the Consolidated Balance Sheet.



	Contract Liabilities
(Dollars in millions)
Balance at December 31, 2018¹	$	147
Contract additions	78
Terminated contracts	(6		)
Revenue recognized	(61		)
Balance at September 30, 2019	$	158


¹	The Balance at December 31, 2018 differs from the amount reported in Note 2 — Revenue Recognition of the 2018 Form 10-K, as the previously reported amount included certain lease-related balances that did not result from contracts with customers.

Transaction price allocated to the remaining performance obligations

The following table includes estimated service revenues expected to be recognized related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period. These estimates represent service revenues to be recognized when wireless services are delivered to customers pursuant to service plan contracts and under certain roaming agreements with other carriers. These estimates are based on contracts in place as of September 30, 2019, and may vary from actual results. As a practical expedient, revenue related to contracts of less than one year, generally month-to-month contracts, are excluded from these estimates.



	Service Revenues
(Dollars in millions)
Remainder of 2019	$	119
2020	111
Thereafter	237
Total	$	467

U.S. Cellular has certain contracts in which it bills an amount equal to a fixed per-unit price multiplied by a variable quantity (e.g., certain roaming agreements with other carriers). Because U.S. Cellular invoices for such items in an amount that corresponds directly with the value of the performance completed to date, U.S. Cellular may recognize revenue in that amount. As a practical expedient, these contracts are excluded from the estimate of future revenues expected to be recognized related to performance obligations that are unsatisfied as of the end of a reporting period.

Contract Cost Assets

U.S. Cellular expects that incremental commission fees paid as a result of obtaining contracts are recoverable and therefore U.S. Cellular capitalizes these costs. As a practical expedient, costs with an amortization period of one year or less are not capitalized. The contract cost asset balance related to commission fees was $130 million at September 30, 2019, and $139 million at December 31, 2018, and was recorded in Other assets and deferred charges in the Consolidated Balance Sheet. Capitalized commission fees are amortized based on the timing of transfer of the goods or services to which the assets relate, typically the contract term which ranges from fifteen months to thirty months. Amortization of contract cost assets was $27 million and $82 million for the three and nine months ended September 30, 2019, respectively, and $27 million and $81 million for the three and nine months ended September 30, 2018, respectively, and was included in Selling, general and administrative expenses.