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Revenue Recognition Financial Statement Supplementals - Rev Rec (Tables) | 9 Months Ended
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Sep. 30, 2018
Financial Statement Supplementals - Rev Rec [Abstract] |
Revenue Recognition, Policy [Policy Text Block] | Note 2: Revenue Recognition ASU 2014-09 and its related amendments (collectively, the New Revenue Standard) are effective for reporting periods beginning after December 15, 2017, and interim periods therein. We adopted the New Revenue Standard effective January 1, 2018 and elected the modified retrospective approach. The results for periods before 2018 were not adjusted for the new standard and the cumulative effect of the change in accounting was recognized through retained earnings at the date of adoption. Revenue Recognition Accounting Policy Summary. We account for revenue in accordance with Accounting Standards Codification (ASC) Topic 606: Revenue from Contracts with Customers. Under Topic 606, a performance obligation is a promise in a contract with a customer to transfer a distinct good or service to the customer. Some of our contracts with customers contain a single performance obligation, while others contain multiple performance obligations most commonly when a contract spans multiple phases of the product life-cycle such as development, production, maintenance and support. 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 there are multiple performance obligations within a contract, we allocate the transaction price to each performance obligation based on its standalone selling price. We consider the contractual consideration payable by the customer and assess variable consideration that may affect the total transaction price, including contractual discounts, contract incentive payments, estimates of award fees, unfunded contract value under U.S. Government contracts, and other sources of variable consideration, when determining the transaction price of each contract. We include variable consideration in the estimated transaction price when there is a basis to reasonably estimate the amount. These estimates are based on historical experience, anticipated performance and our best judgment at the time. We also consider whether our contracts provide customers with significant financing. Generally, our contracts do not contain significant financing. Point in time revenue recognition. Timing of the satisfaction of performance obligations varies across our businesses due to our diverse product and service mix, customer base, and contractual terms. Performance obligations are satisfied as of a point in time for heating, ventilating, air-conditioning and refrigeration systems, certain alarm and fire detection and suppression systems, and certain aerospace components, engines, and spare parts. Revenue is recognized when control of the product transfers to the customer, generally upon product shipment. Over-time revenue recognition. Performance obligations are satisfied over-time if the customer receives the benefits as we perform work, if the customer controls the asset as it is being produced, or if the product being produced for the customer has no alternative use and we have a contractual right to payment. Revenue is recognized for our construction-type and certain production-type contracts on an over-time basis. We recognize revenue on an over-time basis on certain long-term aerospace aftermarket contracts and aftermarket service work; development, fixed price, and other cost reimbursement contracts in our aerospace businesses; and elevator and escalator sales, installation, service, modernization and other construction contracts in our commercial businesses. For construction and installation contracts within our commercial businesses and aerospace performance obligations satisfied over time, revenue is recognized using costs incurred to date relative to total estimated costs at completion to measure progress. Incurred costs represent work performed, which correspond with and best depict transfer of control to the customer. Contract costs include labor, materials, and subcontractors' costs, or other direct costs, and where applicable on government and commercial contracts, indirect costs. For certain of our long-term aftermarket contracts, revenue is recognized over the contract period. In the commercial businesses, revenue is primarily recognized on a straight-line basis over the contract period. In the aerospace businesses, we generally account for such contracts as a series of daily obligations to stand ready to provide product maintenance and aftermarket services. Revenue is primarily recognized in proportion to cost as sufficient historical evidence indicates that the cost of performing services under the contract is incurred on an other than straight-line basis. Aerospace contract modifications are routine and contracts are often modified to account for changes in contract specifications or requirements. Contract modifications that are for goods or services that are not distinct are accounted for as part of the existing contract. We incur costs for engineering and development of aerospace products directly related to existing or anticipated contracts with customers. Such costs generate or enhance our ability to satisfy our performance obligations under these contracts. We capitalize these costs as contract fulfillment costs to the extent the costs are recoverable from the associated contract margin and subsequently amortize the costs as the original equipment (OEM) products are delivered to the customer. In instances where intellectual property does not transfer to the customer, we defer the customer funding of OEM product engineering and development and recognize revenue when the OEM products are delivered to the customer. Costs to obtain contracts are not material. Loss provisions on OEM contracts are recognized to the extent that estimated contract costs exceed the estimated consideration from the products contemplated under the contractual arrangement. For new commitments, we generally record loss provisions at the earlier of contract announcement or contract signing except for certain contracts under which losses are recorded upon receipt of the purchase order that obligates us to perform. For existing commitments, anticipated losses on contractual arrangements are recognized in the period in which losses become evident. Products contemplated under contractual arrangements include firm quantities of product sold under contract and, in the commercial engine and wheels and brakes businesses, future highly probable sales of replacement parts required by regulation that are expected to be sold subsequently for incorporation into the original equipment. In the commercial engine and wheels and brakes businesses, when the combined original equipment and aftermarket arrangement for each individual sales campaign are profitable, we record original equipment product losses, as applicable, at the time of delivery. We review our cost estimates on significant contracts on a quarterly basis and for others, no less frequently than annually or when circumstances change and warrant a modification to a previous estimate. We record changes in contract estimates using the cumulative catch-up method.
Additional Financial Information Disclosure [Text Block] | The following schedules quantify the impact of the New Revenue Standard on the statement of operations for the quarter and nine months ended September 30, 2018. The effect of the new standard represents the increase (decrease) in the line item based on the adoption of the New Revenue Standard.
(dollars in millions) | Quarter Ended September 30, 2018, under previous standard |  | Effect of the New Revenue Standard |  | Quarter Ended September 30, 2018 as reported
Net Sales: |  |  |  |  |
Product sales | $ | 11,228 |  |  | $ | 26 |  |  | $ | 11,254 |
Service sales | 5,233 |  |  | 23 |  |  | 5,256 |
| 16,461 |  |  | 49 |  |  | 16,510 |
Costs and Expenses: |  |  |  |  |
Cost of products sold | 9,389 |  |  | (47 | ) |  | 9,342 |
Cost of services sold | 3,172 |  |  | 22 |  |  | 3,194 |
Research and development | 614 |  |  | (28 | ) |  | 586 |
Selling, general and administrative | 1,681 |  |  | — |  |  | 1,681 |
| 14,856 |  |  | (53 | ) |  | 14,803 |
Other income, net | 132 |  |  | (1 | ) |  | 131 |
Operating profit | 1,737 |  |  | 101 |  |  | 1,838 |
Non-service pension (benefit) | (188 | ) |  | — |  |  | (188 | )
Interest expense, net | 258 |  |  | — |  |  | 258 |
Income from operations before income taxes | 1,667 |  |  | 101 |  |  | 1,768 |
Income tax expense | 394 |  |  | 25 |  |  | 419 |
Net income from operations | 1,273 |  |  | 76 |  |  | 1,349 |
Less: Noncontrolling interest in subsidiaries' earnings from operations | 113 |  |  | (2 | ) |  | 111 |
Net income attributable to common shareowners | $ | 1,160 |  |  | $ | 78 |  |  | $ | 1,238 |
(dollars in millions) | Nine Months Ended September 30, 2018, under previous standard |  | Effect of the New Revenue Standard |  | Nine Months Ended September 30, 2018 as reported
Net Sales: |  |  |  |  |
Product sales | $ | 32,801 |  |  | $ | 231 |  |  | $ | 33,032 |
Service sales | 15,201 |  |  | 224 |  |  | 15,425 |
| 48,002 |  |  | 455 |  |  | 48,457 |
Costs and Expenses: |  |  |  |  |
Cost of products sold | 26,250 |  |  | 262 |  |  | 26,512 |
Cost of services sold | 9,568 |  |  | 158 |  |  | 9,726 |
Research and development | 1,794 |  |  | (65 | ) |  | 1,729 |
Selling, general and administrative | 5,151 |  |  | — |  |  | 5,151 |
| 42,763 |  |  | 355 |  |  | 43,118 |
Other income, net | 1,307 |  |  | (4 | ) |  | 1,303 |
Operating profit | 6,546 |  |  | 96 |  |  | 6,642 |
Non-service pension (benefit) | (571 | ) |  | — |  |  | (571 | )
Interest expense, net | 721 |  |  | — |  |  | 721 |
Income from operations before income taxes | 6,396 |  |  | 96 |  |  | 6,492 |
Income tax expense | 1,612 |  |  | 24 |  |  | 1,636 |
Net income from operations | 4,784 |  |  | 72 |  |  | 4,856 |
Less: Noncontrolling interest in subsidiaries' earnings from operations | 269 |  |  | 4 |  |  | 273 |
Net income attributable to common shareowners | $ | 4,515 |  |  | $ | 68 |  |  | $ | 4,583 |
The New Revenue Standard resulted in an increase to Product and Service sales and Cost of products and services sold primarily due to the change to an over-time basis using an input method revenue model for certain U.S Government and commercial aerospace equipment contracts, and aerospace aftermarket service work at Pratt & Whitney and UTC Aerospace Systems. The New Revenue Standard also resulted in an increase in Cost of products sold during the nine months ended September 30, 2018 related to the timing of manufacturing cost recognition. During the quarter ended September 30, 2018, Cost of products sold were lower under the New Revenue Standard due to a change in the contract average unit costs during the quarter. The lower amounts of research and development expense recognized under the New Revenue Standard reflect the capitalization of costs of engineering and development of aerospace products as contract fulfillment costs under contracts with customers. The following schedule quantifies the impact of the New Revenue Standard on our balance sheet as of September 30, 2018.
(dollars in millions) | September 30, 2018 under previous standard |  | Effect of the New Revenue Standard |  | September 30, 2018 as reported
Assets |  |  |  |  |
Accounts receivable, net | $ | 13,988 |  |  | $ | (1,438 | ) |  | $ | 12,550 |
Contract assets, current | — |  |  | 3,450 |  |  | 3,450 |
Inventories | 11,337 |  |  | (2,269 | ) |  | 9,068 |
Other assets, current | 1,305 |  |  | 32 |  |  | 1,337 |
Future income tax benefits | 1,669 |  |  | 32 |  |  | 1,701 |
Intangible assets, net | 15,771 |  |  | (70 | ) |  | 15,701 |
Other assets | 5,987 |  |  | 1,083 |  |  | 7,070 |
Liabilities and Equity |  |  |  |  |
Accrued liabilities | $ | 14,153 |  |  | $ | (5,286 | ) |  | $ | 8,867 |
Contract liabilities, current | — |  |  | 5,460 |  |  | 5,460 |
Other long term liabilities | 12,357 |  |  | 1,016 |  |  | 13,373 |
Noncontrolling interest | 2,138 |  |  | 6 |  |  | 2,144 |
Retained earnings | 58,118 |  |  | (412 | ) |  | 57,706 |
The decrease in Retained earnings of $412 million in the table above reflects $480 million of adjustments to the balance sheet as of January 1, 2018, resulting from the adoption of the New Revenue Standard partially offset by $68 million higher reported net income under the New Revenue Standard during 2018. The declines in Accounts receivable, net, Inventories, Other assets, current, and Intangible assets, net, reflect reclassifications to contract assets, and specifically for Inventories, earlier recognition of costs of products sold for contracts requiring an over-time method of revenue recognition. The increase in Other assets reflects the establishment of non-current contract assets and contract fulfillment cost assets. The decline in accrued liabilities is primarily due to the reclassification of payments from customers in advance of work performed as contract liabilities. The Other long term liabilities increase primarily reflects the establishment of non-current contract liabilities for certain customer funding of OEM product engineering and development, which will be recognized as revenue when the OEM products are delivered to the customer.

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