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Accounting for Leases as a Lessor (Tables)

3 Months Ended

Jan. 31, 2020

Leases [Abstract]

Components of Financing Receivables

The components of financing receivables were as follows:

	As of
	January 31, 2020				October 31, 2019
	In millions
Minimum lease payments receivable	$	9,144			$	9,070
Unguaranteed residual value	344				336
Unearned income	(752		)		(754		)
Financing receivables, gross	8,736				8,652
Allowance for doubtful accounts	(133		)		(131		)
Financing receivables, net	8,603				8,521
Less: current portion(1)	(3,591		)		(3,572		)
Amounts due after one year, net(1)	$	5,012			$	4,949

(1)

The Company includes the current portion in Financing receivables, net of allowance for doubtful accounts, and amounts due after one year, net in Long-term financing receivables and other assets, in the accompanying Condensed Consolidated Balance Sheets.

Sales-type and Direct Financing Leases, Lease Receivable, Maturity

As of January 31, 2020, scheduled maturities of the Company's minimum lease payments receivable were as follows:

Fiscal year	In millions
Remainder of fiscal 2020	$	3,142
2021	2,728
2022	1,835
2023	922
2024	419
Thereafter	98
Total undiscounted cash flows	$	9,144
Present value of lease payments (recognized as finance receivables)	$	8,337
Difference between undiscounted cash flows and discounted cash flows	$	807

Minimum Lease Payments Receivable

Prior to the adoption of the new lease standard, scheduled maturities of the Company's minimum lease payments receivable as of October 31, 2019 were as follows:

Fiscal year	In millions
2020	$	3,939
2021	2,449
2022	1,555
2023	752
2024	306
Thereafter	69
Total	$	9,070

Credit Risk Profile of Gross Financing Receivables

The credit risk profile of gross financing receivables, based on internal risk ratings, was as follows:

	As of
	January 31, 2020				October 31, 2019
	In millions
Risk Rating:
Low	$	4,435			$	4,432
Moderate	4,005				3,933
High	296				287
Total	$	8,736			$	8,652

Allowance for Doubtful Accounts for Financing Receivables

The allowance for doubtful accounts for financing receivables as of January 31, 2020 and October 31, 2019 and the respective changes during the three and twelve months then ended were as follows:

	As of
	January 31, 2020				October 31, 2019
	In millions
Balance at beginning of period	$	131			$	120
Provision for doubtful accounts	5				33
Write-offs	(3		)		(22		)
Balance at end of period	$	133			$	131

Gross Financing Receivables and Related Allowance Evaluated for Loss

The gross financing receivables and related allowance evaluated for loss were as follows:

	As of
	January 31, 2020				October 31, 2019
	In millions
Gross financing receivables collectively evaluated for loss	$	8,250			$	8,255
Gross financing receivables individually evaluated for loss(1)	486				397
Total	$	8,736			$	8,652
Allowance for financing receivables collectively evaluated for loss	$	86			$	84
Allowance for financing receivables individually evaluated for loss	47				47
Total	$	133			$	131

(1)

Includes billed operating lease receivables and billed and unbilled sales-type and direct-financing lease receivables.

Summary of the Aging and Non-accrual Status of Gross Financing Receivables

The following table summarizes the aging and non-accrual status of gross financing receivables:

	As of
	January 31, 2020				October 31, 2019
	In millions
Billed:(1)
Current 1-30 days	$	350			$	301
Past due 31-60 days	53				62
Past due 61-90 days	32				15
Past due > 90 days	111				88
Unbilled sales-type and direct-financing lease receivables	8,190				8,186
Total gross financing receivables	$	8,736			$	8,652
Gross financing receivables on non-accrual status(2)	$	322			$	276
Gross financing receivables 90 days past due and still accruing interest(2)	$	164			$	121

(1) Includes billed operating lease receivables and billed sales-type and direct-financing lease receivables.

(2)

Includes billed operating lease receivables and billed and unbilled sales-type and direct-financing lease receivables.

Operating Lease Assets Included in Machinery and Equipment

Operating lease assets included in Property, plant and equipment in the Condensed Consolidated Balance Sheets were as follows:

	As of
	January 31, 2020				October 31, 2019
	In millions
Equipment leased to customers	$	7,097			$	7,185
Accumulated depreciation	(3,117		)		(3,101		)
Total	$	3,980			$	4,084

Lessor Operating Lease Payments Maturity

As of January 31, 2020, minimum future rentals on non-cancelable operating leases related to leased equipment were as follows:

Fiscal year	In millions
Remainder of fiscal 2020	$	1,445
2021	1,295
2022	556
2023	113
2024	28
Thereafter	2
Total	$	3,439

Lessor Lease Activity

The following table presents amounts included in the Condensed Consolidated statement of Earnings related to lessor activity as of January 31, 2020:

	In millions
Sales-type leases and direct financing leases:
Interest income	$	113
Lease income - operating leases	625
Total lease income	$	738

Schedule of Variable Interest Entities

The assets in the table below include those that can be used to settle the obligations of the VIE. Additionally, general creditors do not have recourse to the assets of the VIE.

	As of
	January 31, 2020				October 31, 2019
Assets held by VIE	In millions
Other current assets	$	25			$	76
Financing receivables
Short-term	$	183			$	194
Long-term	$	194			$	229
Property, plant and equipment	$	267			$	303
Liabilities held by VIE
Notes payable and short-term borrowings, net of unamortized debt issuance costs	$	319			$	385
Long-term debt, net of unamortized debt issuance costs	$	307			$	370

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