Revenue Recognition (Notes)

6 Months Ended

Mar. 31, 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 six months ended March 31, 2020 and 2019 (in millions):



	Three Months Ended March 31, 2020						Three Months Ended March 31, 2019
	Products & Systems		Services		Total		Products & Systems		Services		Total
Building Solutions North America	$	1,357	$	818	$	2,175	$	1,387	$	800	$	2,187
Building Solutions EMEA/LA	400		450		850		416		462		878
Building Solutions Asia Pacific	271		254		525		351		277		628
Global Products	1,894		—		1,894		2,086		—		2,086

Total	$	3,922	$	1,522	$	5,444	$	4,240	$	1,539	$	5,779



	Six Months Ended March 31, 2020						Six Months Ended March 31, 2019
	Products & Systems		Services		Total		Products & Systems		Services		Total
Building Solutions North America	$	2,713	$	1,629	$	4,342	$	2,708	$	1,595	$	4,303
Building Solutions EMEA/LA	857		921		1,778		833		952		1,785
Building Solutions Asia Pacific	642		512		1,154		707		534		1,241
Global Products	3,746		—		3,746		3,914		—		3,914

Total	$	7,958	$	3,062	$	11,020	$	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, 2020 and 2019 (in millions):



	Three Months Ended March 31,				Six Months Ended March 31,
	2020		2019		2020		2019
Building management systems	$	316	$	320	$	616	$	601
HVAC & refrigeration equipment	1,307		1,474		2,592		2,759
Specialty products	271		292		538		554
Total	$	1,894	$	2,086	$	3,746	$	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 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	March 31, 2020			September 30, 2019
Contract assets - current	Accounts receivable - net	$	1,422		$	1,389
Contract assets - noncurrent	Other noncurrent assets	95			90
Contract liabilities - current	Deferred revenue	(1,600		)	(1,407		)
Contract liabilities - noncurrent	Other noncurrent liabilities	(119		)	(117		)
Total		$	(202	)	$	(45	)

For the three months ended March 31, 2020 and March 31, 2019, the Company recognized revenue of $326 million and $214 million, respectively, that was included in the beginning of period contract liability balance. For the six months ended March 31, 2020 and March 31, 2019, the Company recognized revenue of $1,012 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. The timing of satisfying the performance obligation is typically indicated by the terms of the contract. As of March 31, 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 March 31, 2020, the Company recorded the costs to obtain or fulfill a contract of $228 million, of which $123 million is recorded within other current assets and $105 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 March 31, 2020 and 2019, the Company recognized amortization expense of $43 million and $34 million, respectively, related to costs to obtain or fulfill a contract. During the six months ended March 31, 2020 and 2019, the Company recognized amortization expense of $69 million and $69 million, respectively, related to costs to obtain or fulfill a contract. There were no impairment losses recognized in the three months ended March 31, 2020 and 2019.