Contract Liabilities and Assets

9 Months Ended

Sep. 30, 2021

Disaggregation of Revenue [Abstract]

Contract Liabilities and Assets

Contract Liabilities and Assets

Contract Liabilities

We are the obligor on our lifetime oil contracts. Revenue is allocated to these performance obligations and is recognized over time as services are provided to the customer. The amount of revenue recognized is calculated, net of cancellations, using an input method, which most closely depicts performance of the contracts. Our contract liability balances were $226.9 million and $194.1 million as of September 30, 2021, and December 31, 2020, respectively; and we recognized $8.3 million and $26.8 million of revenue in the three and nine months ended September 30, 2021, respectively, related to our contract liability balance at December 31, 2020. Our contract liability balance is included in accrued liabilities and deferred revenue.

Contract Assets

Revenue from finance and insurance sales is recognized, net of estimated charge-backs, at the time of the sale of the related vehicle. We act as an agent in the sale of these contracts as the pricing is set by the third-party provider, and our commission is preset. A portion of the transaction price related to sales of finance and insurance contracts is considered variable consideration and is estimated and recognized upon the sale of the contract. Our contract asset balances associated with future estimated variable consideration were $9.0 million and $8.2 million as of September 30, 2021 and December 31, 2020, respectively; and are included in trade receivables and other non-current assets.