XML 24 R13.htm IDEA: XBRL DOCUMENT
v3.19.1

Revenue Recognition (Notes) | 6 Months Ended
--- | ---
Mar. 31, 2019
Revenue from Contract with Customer [Abstract] |
Revenue from Contract with Customer [Text Block] | Revenue Recognition The Company designs, manufactures and installs building products and systems around the world, including HVAC equipment, HVAC controls, energy-management systems, security systems, fire detection systems and fire suppression solutions. The Company also provides energy efficiency solutions and technical services, including inspection, scheduled maintenance, and repair and replacement of mechanical and control systems. The Company recognizes revenue from certain long-term contracts to design, manufacture and install building products and systems as well as unscheduled repair or replacement services on an over time basis, with progress towards completion measured using a cost-to-cost input method based on the relationship between actual costs incurred and total estimated costs at completion. The cost-to-cost input method is used as it best depicts the transfer of control to the customer that occurs as the Company incurs costs. Changes to the original estimates may be required during the life of the contract and such estimates are reviewed monthly. If contract modifications result in additional goods or services that are distinct from those transferred before the modification, they are accounted for prospectively as if the Company entered into a new contract. If the goods or services in the modification are not distinct from those in the original contract, sales and gross profit are adjusted using the cumulative catch-up method for revisions in estimated total contract costs and contract values. Estimated losses are recorded when identified. The Company elected the practical expedient which permits the promised amount of consideration to not be adjusted for the effects of a significant financing component as at contract inception the Company expects to receive the payment within the twelve months of transfer of goods or services. The Company enters into extended warranties and long-term service and maintenance agreements with certain customers. For these arrangements, revenue is recognized over time on a straight-line basis over the respective contract term. The Company also sells certain HVAC and refrigeration products and services in bundled arrangements with multiple performance obligations, such as equipment, commissioning, service labor and extended warranties. Approximately four to twelve months separate the timing of the first deliverable until the last piece of equipment is delivered, and there may be extended warranty arrangements with duration of one to five years commencing upon the end of the standard warranty period. In addition, the Company sells security monitoring systems that may have multiple performance obligations, including equipment, installation, monitoring services and maintenance agreements. Revenues associated with sale of equipment and related installations are recognized over time on a cost-to-cost input method, while the revenue for monitoring and maintenance services are recognized over time as services are rendered. The transaction price is allocated to each performance obligation based on the relative selling price method. In order to estimate relative selling price, market data and transfer price studies are utilized. If the standalone selling price is not directly observable, the Company estimates the standalone selling price using an adjusted market assessment approach or expected cost plus margin approach. Revenue recognized for security monitoring equipment and installation is limited to the lesser of their allocated amounts under the estimated selling price hierarchy or the non-contingent up-front consideration received at the time of installation, since collection of future amounts under the arrangement with the customer is contingent upon the delivery of monitoring and maintenance services. For transactions in which the Company retains ownership of the subscriber system asset, fees for monitoring and maintenance services are recognized over time on a straight-line basis over the contract term. Non-refundable fees received in connection with the initiation of a monitoring contract, along with associated direct and incremental selling costs, are deferred and amortized over the estimated life of the contract. In all other cases, the Company recognizes revenue at the point in time when control over the goods or services transfers to the customer. The Company considers the contractual consideration payable by the customer and assess variable consideration that may affect the total transaction price, including discounts, rebates, refunds, credits or other similar sources of variable consideration, when determining the transaction price of each contract. The Company includes variable consideration in the estimated transaction price when it is probable that significant reversal of revenue recognized would not occur when the uncertainty associated with variable consideration is subsequently resolved. These estimates are based on the amount of consideration that the Company expects to be entitled to. Shipping and handling costs billed to customers are included in sales and the related costs are included in cost of sales when control transfers to the customer. The Company has elected to present amounts collected from customers for sales and other taxes net of the related amounts remitted. Disaggregated Revenue The following table presents the Company's revenues disaggregated by segment and by product versus services revenue for the three and six months ended March 31, 2019 (in millions):
|  | Three Months Ended March 31, 2019 |  | Six Months Ended March 31, 2019
|  | Products & Systems |  | Services |  | Total |  | Products & Systems |  | Services |  | Total
Building Solutions North America |  | $ | 1,387 |  |  | $ | 800 |  |  | $ | 2,187 |  |  | $ | 2,708 |  |  | $ | 1,595 |  |  | $ | 4,303 |
Building Solutions EMEA/LA |  | 416 |  |  | 462 |  |  | 878 |  |  | 833 |  |  | 952 |  |  | 1,785 |
Building Solutions Asia Pacific |  | 351 |  |  | 277 |  |  | 628 |  |  | 707 |  |  | 534 |  |  | 1,241 |
Global Products |  | 2,086 |  |  | — |  |  | 2,086 |  |  | 3,914 |  |  | — |  |  | 3,914 |
Total |  | $ | 4,240 |  |  | $ | 1,539 |  |  | $ | 5,779 |  |  | $ | 8,162 |  |  | $ | 3,081 |  |  | $ | 11,243 |
The following table presents further disaggregation of Global Products segment revenues by product type for the three and six months ended March 31, 2019 (in millions):
|  | Three Months Ended March 31, |  | Six Months Ended March 31,
|  | 2019 |  | 2019
Building Management |  | $ | 320 |  |  | $ | 601 |
HVAC & Refrigeration Equipment |  | 1,474 |  |  | 2,759 |
Specialty |  | 292 |  |  | 554 |
Total Global Products |  | $ | 2,086 |  |  | $ | 3,914 |
Contract Balances Contract assets relate to the Company’s right to consideration for performance obligations satisfied but not billed and consist of unbilled receivable 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 |  | March 31, 2019 |  | October 1, 2018
Contract assets - current |  | Accounts receivable - net |  | $ | 1,343 |  |  | $ | 1,261 |
Contract assets - noncurrent |  | Other noncurrent assets |  | 85 |  |  | 85 |
Contract liabilities - current |  | Deferred revenue |  | (1,521 | ) |  | (1,335 | )
Contract liabilities - noncurrent |  | Other noncurrent liabilities |  | (119 | ) |  | (113 | )
Total |  |  |  | $ | (212 | ) |  | $ | (102 | )
For the three and six months ended March 31, 2019, the Company recognized revenue of $214 million and $926 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. Performance obligations are supported by contracts with customers, providing a framework for the nature of the distinct goods, services, or bundle of goods and services. The timing of satisfying the performance obligation is typically indicated by the terms of the contract. As of March 31, 2019, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $13.9 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 has applied the practical expedient for certain revenue streams to exclude 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 March 31, 2019, the Company recorded the costs to obtain or fulfill a contract of $184 million, of which $98 million is recorded within other current assets and $86 million is recorded within other noncurrent assets in the consolidated statements of financial position. During the three and six months ended March 31, 2019, the Company recognized amortization expense of $34 million and $69 million, respectively related to costs to obtain or fulfill a contract. There were no impairment losses recognized in the three and six months ended March 31, 2019.

X
- References No definition available. + Details
Name: | us-gaap_RevenueFromContractWithCustomerAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI http://asc.fasb.org/topic&trid=49130388 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI http://asc.fasb.org/topic&trid=2122369 + Details
Name: | us-gaap_RevenueFromContractWithCustomerTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration