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Contract Assets and Liabilities
 6 Months Ended
Dec. 31, 2020
Contract Assets and Liabilities  
Contract Assets and Liabilities

5. Contract Assets and Liabilities

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We enter into contracts to sell products and provide services, and we recognize contract assets and liabilities that arise from these transactions. We recognize revenue and corresponding accounts receivable according to ASC 606. When we recognize revenue in advance of the point in time at which contracts give us the right to invoice a customer, we record this as unbilled revenue, which is included in accounts receivable, net, on the consolidated balance sheet. We may also receive consideration, per the terms of a contract, from customers prior to transferring goods to the customer. We record customer deposits as contract liabilities. Additionally, we may receive payments, most typically under service and warranty contracts, at the onset of the contract and before services have been performed. In such instances, we record a deferred revenue liability.  We recognize these contract liabilities as sales after all revenue recognition criteria are met.

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Contract assets and liabilities were as follows (in thousands):

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June 30, 

    

December 31, 

    

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Contract Assets:

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2020

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2020

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$ Change

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% Change

 

Unbilled revenue

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$

43,011

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$

46,481

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$

3,470

 

8

%

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Contract Liabilities:

    

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Advances from customers

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$

28,155

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$

73,899

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$

45,744

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162

%

Deferred revenue—current

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32,863

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33,160

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297

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1

%

Deferred revenue—long-term

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13,214

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13,542

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328

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2

%

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Contract assets increased during the six months ended December 31, 2020 primarily due to satisfaction of performance obligations for aviation, cargo and vehicle inspection customers in our Security division which have not yet been billed. The increase in contract liabilities was primarily due to receipt of upfront deposits from customers in our Security division.

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Remaining Performance Obligations. Remaining performance obligations related to ASC 606 represent the aggregate transaction price allocated to performance obligations under an original contract with a term greater than one year which are fully or partially unsatisfied at the end of the period. As of December 31, 2020, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $361.1 million. We expect to recognize revenue on approximately 60% of the remaining performance obligations over the next 12 months, and the remainder is expected to be recognized thereafter. During the six months ended December 31, 2020, we recognized revenue of $39.3 million from contract liabilities existing at the beginning of the period.

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Practical Expedients. In cases where we are responsible for shipping after the customer has obtained control of the goods, we have elected to treat the shipping activities as fulfillment activities rather than as a separate performance obligation. Additionally, we have elected to capitalize the cost to obtain a contract only if the period of amortization would be longer than one year. We only give consideration to whether a customer agreement has a financing component if the period of time between transfer of goods and services and customer payment is greater than one year.