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Revenue Recognition
 9 Months Ended
Sep. 30, 2020
Revenue Recognition and Deferred Revenue [Abstract]  
Revenue Recognition
The following table disaggregates our revenue by business segment by geography which provides information as to the major source of revenue. See Note 2 for additional information on our reportable business segments and the products and services sold in each segment.
For the Three Months Ended September 30, 2020
Primary Geographic MarketsResidential Heating & CoolingCommercial Heating & CoolingRefrigerationConsolidated
United States$665.6 $184.6 $67.2 $917.4 
Canada56.4 22.7 — 79.1 
Other international— 0.6 57.9 58.5 
Total$722.0 $207.9 $125.1 $1,055.0 

For the Three Months Ended September 30, 2019
Primary Geographic MarketsResidential Heating & CoolingCommercial Heating & CoolingRefrigerationConsolidated
United States$597.3 $227.0 $82.5 $906.8 
Canada40.3 26.0 — 66.3 
Other international— 0.3 59.5 59.8 
Total$637.6 $253.3 $142.0 $1,032.9 


For the Nine Months Ended September 30, 2020
Primary Geographic MarketsResidential Heating & CoolingCommercial Heating & CoolingRefrigerationConsolidated
United States$1,681.8 $518.9 $188.0 $2,388.7 
Canada127.0 54.8 — $181.8 
Other international— 0.9 148.7 $149.6 
Total$1,808.8 $574.6 $336.7 $2,720.1 


For the Nine Months Ended September 30, 2019
Primary Geographic MarketsResidential Heating & CoolingCommercial Heating & CoolingRefrigerationConsolidated
United States$1,677.6 $623.3 $254.1 $2,555.0 
Canada114.6 63.8 0.7 $179.1 
International— 0.8 187.3 $188.1 
Total$1,792.2 $687.9 $442.1 $2,922.2 

Residential Heating & Cooling - We manufacture and market a broad range of furnaces, air conditioners, heat pumps, packaged heating and cooling systems, equipment and accessories to improve indoor air quality, comfort control products, replacement parts and supplies and related products for both the residential replacement and new construction markets in North America. These products are sold under various brand names and are sold either through direct sales to a network of independent installing dealers, including through our network of Lennox stores or to independent distributors. For the three months ended September 30, 2020 and 2019, direct sales represented 74% and 74% of revenues, and sales to independent distributors represented the remainder. For the nine months ended September 30, 2020 and 2019, direct sales represented 75% and 74% of revenues, and sales to independent distributors represented the remainder. Given the nature of our business, customer product orders are fulfilled at a point in time and not over a period of time.

Commercial Heating & Cooling - In North America, we manufacture and sell unitary heating and cooling equipment used in light commercial applications, such as low-rise office buildings, restaurants, retail centers, churches and schools. These
products are distributed primarily through commercial contractors and directly to national account customers in the planned replacement, emergency replacement and new construction markets. Revenue for the products sold is recognized at a point in time when control transfers to the customer, which is generally at time of shipment. Lennox National Account Services provides installation, service and preventive maintenance for HVAC national account customers in the United States and Canada. Revenue related to service contracts is recognized as the services are performed under the contract based on the relative fair value of the services provided. For the three months ended September 30, 2020 and 2019, equipment sales represented 83% and 86% of revenues and the remainder of our revenue was generated from our service business. For the nine months ended September 30, 2020 and 2019, equipment sales represented 84% and 86% of revenues, and the remainder of our revenue was generated from our service business.

Refrigeration - We manufacture and market equipment for the global commercial refrigeration markets under the Heatcraft Worldwide Refrigeration name. Our products are used in the food retail, food service, cold storage as well as non-food refrigeration markets. We sell these products to distributors, installing contractors, engineering design firms, original equipment manufacturers and end-users. In Europe, we also manufacture and sell unitary heating and cooling products and applied systems. Substantially all segment revenue was related to these types of equipment and systems and is recognized at a point in time when control transfers to the customer, which is generally at time of shipment. Less than 1% of segment revenue relates to services for start-up and commissioning activities.
Variable Consideration - We engage in cooperative advertising, customer rebate, and other miscellaneous programs that result in payments or credits being issued to our customers. We record these customer discounts and incentives as a reduction of sales when the sales are recorded. For certain cooperative advertising programs, we also receive an identifiable benefit (goods or services) in exchange for the consideration given, and, accordingly, record a ratable portion of the expenditure to Selling, general and administrative (“SG&A”) expenses. All other advertising, promotions and marketing costs are expensed as incurred.

Other Judgments and Assumptions - We apply the practical expedient in ASC 606-10-50-14 and do not disclose information about remaining performance obligations that have original expected durations of one year or less. Applying the practical expedient in ASC 340-40-25-4, we recognize the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that we otherwise would have recognized is one year or less. These costs are included in SG&A expenses. ASC 606-10-32-18 allows us to not adjust the amount of consideration to be received in a contract for any significant financing component if we expect to receive payment within twelve months of transfer of control of goods or services. We have elected this expedient as we expect all consideration to be received in one year or less at contract inception. We have also elected not to provide the remaining performance obligations disclosures related to service contracts in accordance with the practical expedient in ASC 606-10-55-18. We recognize revenue in the amount to which the entity has a right to invoice and have adopted this election to not provide the remaining performance obligations related to service contracts.

Contract Assets - We do not have material amounts of contract assets since revenue is recognized as control of goods is transferred or as services are performed. There are a small number of installation services that may occur over a period of time, but that period of time is generally very short in duration and right of payment does not exist until the installation is completed. Any contract assets that may arise are recorded in Other assets, net in our Consolidated Balance Sheets.

Contract Liabilities - Our contract liabilities consist of advance payments and deferred revenue. Our contract liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period. We classify advance payments and deferred revenue as current or noncurrent based on the timing of when we expect to recognize revenue. Generally all contract liabilities are expected to be recognized within one year and are included in Accrued expenses in our Consolidated Balance Sheets. The noncurrent portion of deferred revenue is included in Other liabilities in our Consolidated Balance Sheets.

Net contract assets (liabilities) consisted of the following:
September 30, 2020December 31, 2019$ Change% Change
Contract liabilities - current$(7.0)$(8.4)$1.4 (16.7)%
Contract liabilities - noncurrent(5.6)(5.9)0.3 (5.1)%
Total$(12.6)$(14.3)$1.7 

For the three months ended September 30, 2020 and 2019, we recognized revenue of $1.4 million and $0.2 million and for the nine months ended September 30, 2020 and 2019 we recognized revenue of $5.9 million and $2.8 million related to our contract liabilities at January 1, 2020 and 2019, respectively. Impairment losses recognized in our receivables and contract assets were de minimis in 2020 and 2019.