Revenue Recognition (Notes)

9 Months Ended

Jun. 30, 2020

Revenue from Contract with Customer [Abstract]

Revenue from Contract with Customer [Text Block]

Revenue Recognition

Disaggregated Revenue

The following tables present the Company's revenues disaggregated by segment and by products and systems versus services revenue for the three and nine months ended June 30, 2020 and 2019 (in millions):

	Three Months Ended June 30, 2020						Three Months Ended June 30, 2019
	Products & Systems		Services		Total		Products & Systems		Services		Total
Building Solutions North America	$	1,250	$	770	$	2,020	$	1,494	$	833	$	2,327
Building Solutions EMEA/LA	346		410		756		464		458		922
Building Solutions Asia Pacific	344		244		588		427		264		691
Global Products	1,979		—		1,979		2,511		—		2,511
Total	$	3,919	$	1,424	$	5,343	$	4,896	$	1,555	$	6,451

	Nine Months Ended June 30, 2020						Nine Months Ended June 30, 2019
	Products & Systems		Services		Total		Products & Systems		Services		Total
Building Solutions North America	$	3,963	$	2,399	$	6,362	$	4,202	$	2,428	$	6,630
Building Solutions EMEA/LA	1,203		1,331		2,534		1,297		1,410		2,707
Building Solutions Asia Pacific	986		756		1,742		1,134		798		1,932
Global Products	5,725		—		5,725		6,425		—		6,425
Total	$	11,877	$	4,486	$	16,363	$	13,058	$	4,636	$	17,694

The following table presents further disaggregation of Global Products segment revenues by product type for the three and nine months ended June 30, 2020 and 2019 (in millions):

	Three Months Ended June 30,				Nine Months Ended June 30,
	2020		2019		2020		2019
Building management systems	$	244	$	342	$	860	$	943
HVAC & refrigeration equipment	1,493		1,869		4,085		4,628
Specialty products	242		300		780		854
Total	$	1,979	$	2,511	$	5,725	$	6,425

Contract Balances

Contract assets relate to the Company’s right to consideration for performance obligations satisfied but not billed and consist of unbilled receivables and costs in excess of billings. Contract liabilities relate to customer payments received in advance of satisfaction of performance obligations under the contract. Contract liabilities consist of deferred revenue. Contract balances are classified as assets or liabilities on a contract-by-contract basis at the end of each reporting period. 

The following table presents the location and amount of contract balances in the Company's consolidated statements of financial position (in millions):

	Location of contract balances	June 30, 2020		September 30, 2019
Contract assets - current	Accounts receivable - net	$	1,409	$	1,389
Contract assets - noncurrent	Other noncurrent assets	98		90
Contract liabilities - current	Deferred revenue	(1,451)		(1,407)
Contract liabilities - noncurrent	Other noncurrent liabilities	(120)		(117)
Total		$	(64)	$	(45)

For the three months ended June 30, 2020 and June 30, 2019, the Company recognized revenue of $125 million and $130 million, respectively, that was included in the beginning of period contract liability balance. For the nine months ended June 30, 2020 and June 30, 2019, the Company recognized revenue of $1,137 million and $1,056 million, respectively, that was included in the beginning of period contract liability balance.

Performance Obligations

A performance obligation is a distinct good, service, or a bundle of goods and services promised in a contract. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. When contracts with customers require significant and complex integration, contain goods or services which are highly interdependent or interrelated, or are goods or services which significantly modify or customize other promises in the contracts and, therefore, are not distinct, then the entire contract is accounted for as a single performance obligation. For any contracts with multiple performance obligations, the contract’s transaction price is allocated to each performance obligation based on the estimated relative standalone selling price of each distinct good or service in the contract. For product sales, each product sold to a customer typically represents a distinct performance obligation.

Performance obligations are satisfied as of a point in time or over time. The timing of satisfying the performance obligation is typically indicated by the terms of the contract. As of June 30, 2020, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $14.4 billion, of which approximately 60% is expected to be recognized as revenue over the next two years. The remaining performance obligations expected to be recognized in revenue beyond two years primarily relate to large, multi-purpose contracts to construct hospitals, schools and other governmental buildings, which include services to be performed over the building's lifetime, with initial contract terms of 25 to 35 years. Future contract modifications could affect both the timing and the amount of the remaining performance obligations. The Company excludes the value of remaining performance obligations for contracts with an original expected duration of one year or less.

Costs to Obtain or Fulfill a Contract

The Company recognizes the incremental costs incurred to obtain or fulfill a contract with a customer as an asset when these costs are recoverable. These costs consist primarily of sales commissions and bid/proposal costs. Costs to obtain or fulfill a contract are capitalized and amortized to revenue over the period of contract performance.

As of June 30, 2020, the Company recorded the costs to obtain or fulfill a contract of $224 million, of which $121 million is recorded within other current assets and $103 million is recorded within other noncurrent assets in the consolidated statements of financial position. As of September 30, 2019, the Company recorded the costs to obtain or fulfill a contract of $212 million, of which $110 million is recorded within other current assets and $102 million is recorded within other noncurrent assets in the consolidated statements of financial position.

During the three months ended June 30, 2020 and 2019, the Company recognized amortization expense of $47 million and $50 million, respectively, related to costs to obtain or fulfill a contract. During the nine months ended June 30, 2020 and 2019, the Company recognized amortization expense of $116 million and $119 million, respectively, related to costs to

obtain or fulfill a contract. There were no impairment losses recognized in the three and nine months ended June 30, 2020 and 2019.