Contract Assets and Contract Liabilities

6 Months Ended

Jun. 30, 2021

Revenue from Contract with Customer [Abstract]

Contract Assets and Contract Liabilities

CONTRACT ASSETS AND CONTRACT LIABILITIES

Contract assets include unbilled amounts resulting from sales under long-term contracts where revenue is recognized over time and revenue exceeds the amount that can be billed to the customer based on the terms of the contract. The current portion of the contract assets are classified as current assets under the caption “Unbilled accounts receivable” while the noncurrent contract assets are classified as other assets under the caption "Other noncurrent assets" on the consolidated balance sheet. Noncurrent contract assets were $113.5 million at June 30, 2021 and $101.0 million at December 31, 2020, respectively. Included in noncurrent contract assets are certain costs that are specifically related to a contract, however, do not directly contribute to the transfer of control of the tangible product being created, such as non-recurring engineering costs. The Company has elected to use the practical expedient and does not consider unbilled amounts anticipated to be paid within one year as significant financing components.

Contract liabilities include customer deposits that are made prior to the incurrence of costs related to a newly agreed upon contract and advanced customer payments that are in excess of revenue recognized. The current portion of contract liabilities are classified as current liabilities under the caption “Customer deposits” while the noncurrent contract liabilities are classified as noncurrent liabilities under the caption "Other long-term liabilities" on the consolidated balance sheet. Noncurrent contract liabilities were $66.1 million at June 30, 2021 and $79.6 million at December 31, 2020. These contract liabilities are not considered a significant financing component because they are used to meet working capital demands that can be higher in the early stages of a contract or revenue associated with the contract liabilities is expected to be recognized within one year. Contract liabilities also include provisions for estimated losses from uncompleted contracts. Provisions for loss contracts were $122.5 million and $108.9 million at June 30, 2021 and December 31, 2020, respectively. These provisions for estimated losses are classified as current liabilities and included within the caption “Other accrued liabilities” on the consolidated balance sheets.

The change in the carrying amount of contract assets and contract liabilities for the six months ended June 30, 2021 and 2020 is as follows:

	Contract Assets
In millions	2021		2020
Balance at beginning of year	$	544.2	$	623.4
Acquisitions	—		4.1
Recognized in current year	369.5		451.8
Reclassified to accounts receivable	(364.0)		(519.1)
Foreign currency impact	(4.5)		(6.2)
Balance at June 30	$	545.2	$	554.0
	Contract Liabilities
In millions	2021		2020
Balance at beginning of year	$	831.2	$	799.7
Acquisitions	1.7		6.8
Recognized in current year	339.3		424.7
Amounts in beginning balance reclassified to revenue	(316.7)		(333.9)
Current year amounts reclassified to revenue	(63.3)		(107.5)
Foreign currency impact	(6.1)		(12.0)
Balance at June 30	$	786.1	$	777.8