Inventories and Contracts in Progress

9 Months Ended

Sep. 30, 2016

Inventory Disclosure [Abstract]

Inventories and Contracts in Progress [Text Block]

Inventories and Contracts in Progress

(Dollars in millions)	September 30, 2016			December 31, 2015
Raw materials	$	2,209		$	2,037
Work-in-process	2,807			2,422
Finished goods	3,438			3,183
Contracts in progress	9,580			8,668
	18,034			16,310
Less:
Progress payments, secured by lien, on U.S. Government contracts	(157		)	(239		)
Billings on contracts in progress	(8,796		)	(7,936		)
	$	9,081		$	8,135

Included within inventory are capitalized contract development costs related to certain aerospace programs at UTC Aerospace Systems. As of September 30, 2016 and December 31, 2015, these capitalized costs were $148 million and $152 million, respectively, which will be liquidated as production units are delivered to the customer. Within commercial aerospace, inventory costs attributable to new engine offerings are recognized based on the average cost per unit expected over the life of each contract using the units-of-delivery method of percentage of completion accounting. Under this method, costs of initial engine deliveries in excess of the projected contract per unit average cost are capitalized, and these capitalized amounts are subsequently expensed as additional engine deliveries occur for engines with costs below the projected contract per unit average cost over the life of the contract. As of September 30, 2016 and December 31, 2015, inventory included $144 million and $13 million, respectively, of such capitalized amounts.