XML 25 R13.htm IDEA: XBRL DOCUMENT v3.24.3
Contract Assets and Liabilities
 9 Months Ended
Sep. 30, 2024
Revenue from Contract with Customer [Abstract]  
Contract Assets and Liabilities
Note 7: Contract Assets and Liabilities
Contract assets reflect revenue recognized and performance obligations satisfied in advance of customer billings. Contract liabilities relate to payments received in advance of the satisfaction of performance under the contract. We receive payments from customers based on the terms established in our contracts. Total contract assets and contract liabilities were as follows:
(dollars in millions)September 30, 2024December 31, 2023
Contract assets$14,684 $12,139 
Contract liabilities(18,436)(17,183)
Net contract liabilities$(3,752)$(5,044)
Contract assets increased $2.5 billion during the nine months ended September 30, 2024 primarily due to sales in excess of billings on certain contracts at Pratt & Whitney and Raytheon. Contract liabilities increased $1.3 billion during the nine months ended September 30, 2024 primarily due to billings in excess of sales on certain contracts at Raytheon. We recognized revenue of $1.3 billion and $5.7 billion during the quarter and nine months ended September 30, 2024, respectively, related to contract liabilities outstanding as of January 1, 2024 and recognized revenue of $0.9 billion and $4.4 billion during the quarter and nine months ended September 30, 2023, respectively, related to contract liabilities outstanding as of January 1, 2023.
During the third quarter of 2024, we received a critical license required to restart work under certain contracts with a Middle East customer. In order to perform under these contracts, significant actions are required, including obtaining additional regulatory approvals, and therefore we have not recognized revenue on these contracts to date. As of September 30, 2024, our Contract liabilities include approximately $430 million of advance payments received in connection with these contracts, which may become refundable to the customer if the contracts are ultimately terminated.
Contract assets are net of an allowance for expected credit losses of $177 million and $197 million as of September 30, 2024 and December 31, 2023, respectively.