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Revenue Recognition | 3 Months Ended
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Mar. 31, 2020
Revenue from Contract with Customer [Abstract] |
Revenue Recognition | Revenue Recognition Disaggregated net sales by major source:
|  |  |  |  | Three months ended March 31, |  |
|  |  |  |  | 2020 |  | 2019
|  |  |  |  | (in thousands) |  |
Rooftop Units |  |  |  |  | $ | 110,830 |  |  | $ | 88,343 |
Condensing Units |  |  |  |  | 4,498 |  |  | 4,050 |
Air Handlers |  |  |  |  | 6,247 |  |  | 5,594 |
Outdoor Mechanical Rooms |  |  |  |  | 915 |  |  | 482 |
Water Source Heat Pumps |  |  |  |  | 3,703 |  |  | 5,844 |
Part Sales |  |  |  |  | 6,513 |  |  | 6,490 |
Other |  |  |  |  | 4,777 |  |  | 3,019 |
Net Sales |  |  |  |  | $ | 137,483 |  |  | $ | 113,822 |
Disaggregated units sold by major source:
|  |  |  |  | Three months ended March 31, |  |
|  |  |  |  | 2020 |  | 2019
Rooftop Units |  |  |  |  | 4,061 |  |  | 3,762 |
Condensing Units |  |  |  |  | 408 |  |  | 394 |
Air Handlers |  |  |  |  | 510 |  |  | 580 |
Outdoor Mechanical Rooms |  |  |  |  | 10 |  |  | 11 |
Water Source Heat Pumps |  |  |  |  | 1,617 |  |  | 2,289 |
Total Units |  |  |  |  | 6,606 |  |  | 7,036 |
The Company recognizes revenue when it satisfies the performance obligation in its contracts. Most of the Company’s products are highly customized, cannot be resold to other customers and the cost of rework to be resold is not economical. The Company has a formal cancellation policy and generally does not accept returns on these units. As a result, many of the Company’s products do not have an alternative use and therefore, for these products we recognize revenue over the time it takes to produce the unit. For all other products that are part sales or standardized units, we satisfy the performance obligation when the control is passed to the customer, generally at time of shipment. Final sales prices are fixed based on purchase orders. Sales allowances and customer incentives are treated as reductions to sales and are provided for based on historical experiences and current estimates. Sales of our products are moderately seasonal with the peak period being July - November of each year. In addition, the Company presents revenues net of sales tax and net of certain payments to our independent manufacturer representatives (“Representatives”). Representatives are national companies that are in the business of providing HVAC units and other related products and services to customers. The end user customer orders a bundled group of products and services from the Representative and expects the Representative to fulfill the order. Only after the specifications are agreed to by the Representative and the customer, and the decision is made to use an AAON HVAC unit, will we receive notice of the order. We establish the amount we must receive for our HVAC unit (“minimum sales price”), but do not control the total order price that is negotiated by the Representative with the end user customer. We are responsible for billings and collections resulting from all sales transactions, including those initiated by our Representatives. The Representatives submit the total order price to us for invoicing and collection. The total order price includes our minimum sales price and an additional amount which may include both the Representatives’ fee and amounts due for additional products and services required by the customer. These additional products and services may include controls purchased from another manufacturer to operate the unit, start-up services, and curbs for supporting the unit (“Third Party Products”). All are associated with the purchase of a HVAC unit but may be provided by the Representative or another third party. The Company is under no obligation related to Third Party Products. The Representatives’ fee and Third Party Products amounts (“Due to Representatives”) are paid only after all amounts associated with the order are collected from the customer. The amount of payments to our Representatives were $12.6 million and $11.5 million for the three months ended March 31, 2020 and 2019, respectively. The Company also sells extended warranties on parts for various lengths of time ranging from six months to 10 years. Revenue for these separately priced warranties is deferred and recognized on a straight-line basis over the separately priced warranty period.

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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 + Details
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