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Revenue Recognition | 12 Months Ended
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Dec. 31, 2021
Revenue from Contract with Customer [Abstract] |
Revenue Recognition | 4. Revenue Recognition Our performance obligations under a customer contract correspond to each shipment of product that we make to our customer under the contract. As a result, each contract may have more than one performance obligation based on the number of products ordered, the quantity of product to be shipped and the mode of shipment requested by the customer. When we enter into a contract with a customer, we are obligated to provide the product in that contract during a mutually agreed upon time period. Depending on the terms of the contract, either we or the customer arranges delivery of the product to the customer’s intended destination. When we arrange delivery of the product and control of the product transfers upon loading, we recognize freight revenue, which was not material for 2021, 2020 or 2019. Certain of our contracts require us to supply products on a continuous basis to the customer. We recognize revenue on these contracts based on the quantity of products transferred to the customer during the period. For 2021, 2020 and 2019, the total amount of revenue for these contracts was $92 million, $44 million and $55 million, respectively. From time to time, we will enter the marketplace to purchase product in order to satisfy the obligations of our customer contracts. When we purchase product for this purpose, we are the principal in the transaction and recognize revenue on a gross basis. As discussed in Note 9—Equity Method Investment, we have transactions in the normal course of business with PLNL, reflecting our obligation to purchase 50% of the ammonia produced by PLNL at current market prices. During the year ended December 31, 2021, in addition to products purchased from PLNL, we recognized $68 million of revenue from sales of granular urea, which we purchased in order to satisfy obligations under contracts with our customers due primarily to the impact of Winter Storm Uri. Other than products purchased from PLNL and granular urea purchased as a result of Winter Storm Uri, products purchased in the marketplace in order to satisfy the obligations of our customers were not material during 2021, 2020 or 2019. Transaction Price We agree with our customers on the selling price of each transaction. This transaction price is generally based on the product, market conditions, including supply and demand balances, freight arrangements including where control transfers, and customer incentives. In our contracts with customers, we allocate the entire transaction price to the sale of product to the customer, which is the basis for the determination of the relative standalone selling price allocated to each performance obligation. Any sales tax, value added tax, and other tax we collect concurrently with our revenue-producing activities are excluded from revenue. Returns of our product by our customers are permitted only when the product is not to specification. Returns were not material during 2021, 2020 or 2019. We offer cash incentives to certain customers generally based on the volume of their purchases over the fertilizer year ending June 30. Our cash incentives do not provide an option to the customer for additional product. Accrual of these incentives involves the use of estimates, including how much product the customer will purchase and whether the customer will achieve a certain level of purchases within the incentive period. The balances of customer incentives accrued at December 31, 2021 and 2020 were not material. Revenue Disaggregation We track our revenue by product and by geography. See Note 22—Segment Disclosures for our revenue by reportable segment, which are Ammonia, Granular Urea, UAN, AN and Other. The following table summarizes our revenue by product and by geography (based on destination of our shipment) for 2021, 2020 and 2019:
| Ammonia |  | Granular Urea |  | UAN |  | AN |  | Other |  | Total
| (in millions)
Year ended December 31, 2021 |  |  |  |  |  |  |  |  |  |  |
North America | $ | 1,575 |  |  | $ | 1,880 |  |  | $ | 1,667 |  |  | $ | 212 |  |  | $ | 400 |  |  | $ | 5,734 |
Europe and other | 212 |  |  | — |  |  | 121 |  |  | 298 |  |  | 173 |  |  | 804 |
Total revenue | $ | 1,787 |  |  | $ | 1,880 |  |  | $ | 1,788 |  |  | $ | 510 |  |  | $ | 573 |  |  | $ | 6,538 |
Year ended December 31, 2020 |  |  |  |  |  |  |  |  |  |  |
North America | $ | 874 |  |  | $ | 1,183 |  |  | $ | 998 |  |  | $ | 197 |  |  | $ | 235 |  |  | $ | 3,487 |
Europe and other | 146 |  |  | 65 |  |  | 65 |  |  | 258 |  |  | 103 |  |  | 637 |
Total revenue | $ | 1,020 |  |  | $ | 1,248 |  |  | $ | 1,063 |  |  | $ | 455 |  |  | $ | 338 |  |  | $ | 4,124 |
Year ended December 31, 2019 |  |  |  |  |  |  |  |  |  |  |
North America | $ | 948 |  |  | $ | 1,269 |  |  | $ | 1,176 |  |  | $ | 200 |  |  | $ | 256 |  |  | $ | 3,849 |
Europe and other | 165 |  |  | 73 |  |  | 94 |  |  | 306 |  |  | 103 |  |  | 741 |
Total revenue | $ | 1,113 |  |  | $ | 1,342 |  |  | $ | 1,270 |  |  | $ | 506 |  |  | $ | 359 |  |  | $ | 4,590 |
Accounts Receivable and Customer Advances Our customers purchase our products through sales on credit or forward sales. Products sold to our customers on credit are recorded as accounts receivable when the customer obtains control of the product. Customers that purchase our products on credit are required to pay in accordance with our customary payment terms, which are generally less than 30 days. For 2021, 2020 and 2019, the amount of customer bad debt expense recognized was not material. For forward sales, the customer prepays a portion of the value of the sales contract prior to obtaining control of the product. These prepayments, when received, are recorded as customer advances and are recognized as revenue when the customer obtains control of the product. Forward sales are customarily offered for periods of less than one year in advance of when the customer obtains control of the product. As of December 31, 2021 and 2020, we had $700 million and $130 million, respectively, in customer advances on our consolidated balance sheets. The increase in the balance of customer advances was due primarily to higher average selling prices and an increase in forward contracts amidst an increasing price environment. During 2021, all of our customer advances that were recorded as of December 31, 2020 were recognized as revenue. We have certain customer contracts with performance obligations where if the customer does not take the required amount of product specified in the contract, then the customer is required to make a payment to us, which may vary based upon the terms and conditions of the applicable contract. As of December 31, 2021, excluding contracts with original durations of less than one year, and based on the minimum product tonnage to be sold and current market price estimates, our remaining performance obligations under these contracts are approximately $809 million. We expect to recognize approximately 44% of these performance obligations as revenue in 2022, approximately 50% as revenue during 2023 and 2024, approximately 4% as revenue during 2025 and 2026, and the remainder thereafter. If these customers do not fulfill their contractual obligations under such contracts, the legally enforceable minimum amount that they would pay to us under these contracts is approximately $162 million as of December 31, 2021. Other than the performance obligations described above, any performance obligations with our customers that were unfulfilled or partially filled at December 31, 2021 will be satisfied in 2022. All of our contracts require that the period between the payment for goods and the transfer of those goods to the customer occur within normal contractual terms that do not exceed one year; therefore, we have not adjusted the transaction price of any of our contracts to recognize a significant financing component. We have also expensed any incremental costs associated with obtaining a contract that has a duration of less than one year, and there were no costs capitalized during 2021, 2020 or 2019.

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- 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://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI http://asc.fasb.org/topic&trid=49130388 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130551-203045 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 13 -Subparagraph (b)(2) -URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130556-203045 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130550-203045 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (e) -URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130558-203045 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (c) -URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045 + Details
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