Contract Assets and Liabilities

12 Months Ended

Dec. 31, 2019

Revenue from Contract with Customer [Abstract]

Revenue from Contract with Customer

CONTRACT ASSETS AND LIABILITIESContract assets reflect revenue recognized and performance obligations satisfied in advance of customer billing. Contract liabilities relate to payments received in advance of the satisfaction of performance under the contract. We receive payments

from customers based on the terms established in our contracts. Total contract assets and contract liabilities as of December 31, 2019 and 2018 are as follows:

(dollars in millions)	December 31, 2019		December 31, 2018
Total contract assets	$	4,462	$	3,666
Total contract liabilities	(9,014)		(7,818)
Net contract liabilities	$	(4,552)	$	(4,152)

Contract assets increased $796 million during the year ended December 31, 2019 due to revenue recognition in excess of customer billings, primarily on Pratt & Whitney military and commercial aftermarket service agreements and various programs at Collins Aerospace Systems. Contract liabilities increased $1,196 million during the year ended December 31, 2019 primarily due to customer billings in excess of revenue recognized on Pratt & Whitney commercial aftermarket service agreements and various programs at Collins Aerospace Systems. We recognized revenue of $2.9 billion during the year ended December 31, 2019 related to contract liabilities as of December 31, 2018.