. Contract Assets and Contract Liabilities

Contract assets represent accumulated incurred costs and earned profits on contracts with customers that have been recorded as sales but have not been billed to customers and are classified as current. Contract liabilities consist of advance payments and billings in excess of costs incurred and deferred revenue, and represent amounts received in excess of sales recognized on contracts. The Company classifies advance payments and billings in excess of costs incurred as current, and deferred revenue as current or non-current based on the expected timing of sales recognition. Contract assets and contract liabilities are determined on a contract by contract basis at the end of each reporting period. The non-current portion of contract liabilities is included in other liabilities in the Company's consolidated balance sheets (see Note 10).

The table below presents the components of net contract assets (liabilities).



	March 30, 2018			January 1, 2018
	(in millions)
Contract assets	$	1,499		$	1,349
Contract liabilities — current	(607		)	(565		)
Contract liabilities — non-current	(30		)	(28		)
Net contract assets (liabilities)	$	862		$	756

Net contract assets (liabilities) increased from January 1, 2018 to March 30, 2018, primarily due to sales exceeding billings due to contractual billing terms on U.S. Government contracts related to Advanced Communications, Mission Integration, Link Training & Simulation and Space & Power Systems, partially offset by a decrease for Security & Detection Systems primarily due to higher billings related to product shipments. Contract assets increased by $150 million primarily due to the same factors as discussed above, in addition to sales exceeding billings due to contractual billings terms on U.S. Government contracts related to Mission Integration. Contract liabilities increased by $44 million primarily due to advances received by Mission Integration for aircraft procurements related to U.S. and foreign government contracts during the quarterly period ended March 30, 2018.

The Company did not recognize any impairment losses on contract assets during the quarterly period ended March 30, 2018.

For the quarterly period ended March 30, 2018, the Company recognized sales of $243 million related to its contract liabilities at January 1, 2018.

The components of contract assets are presented in the table below.



	March 30, 2018			January 1, 2018
	(in millions)
Unbilled contract receivables, gross	$	2,481		$	2,232
Unliquidated progress payments and advances	(982		)	(883		)
Total contract assets	$	1,499		$	1,349