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REVENUE RECOGNITION
6 Months Ended
Jun. 30, 2023
Revenue from Contract with Customer [Abstract]  
REVENUE RECOGNITION REVENUE RECOGNITION
The Company accounts for revenue in accordance with ASC 606: Revenue from Contracts with Customers. Revenue is recognized when control of a good or service promised in a contract (i.e., performance obligation) is transferred to a customer. Control is obtained when a customer has the ability to direct the use of and obtain substantially all of the remaining benefits from that good or service. A significant portion of the Company's performance obligations are recognized at a point-in-time when control of the product transfers to the customer, which is generally at the time of shipment. The remaining portion of the Company’s performance obligations are recognized over time as the customer simultaneously obtains control as the Company performs work under a contract, or if the product being produced for the customer has no alternative use and the Company has a contractual right to payment.

Sales disaggregated by product and service are as follows:

 Three Months Ended June 30,Six Months Ended June 30,
(In millions)2023202220232022
Sales Type
Product$3,754 $3,005 $6,955 $5,644 
Service462 383 883 714 
HVAC sales4,216 3,388 7,838 6,358 
Product858 925 1,645 1,792 
Service114 116 225 225 
Refrigeration sales972 1,041 1,870 2,017 
Product869 838 1,682 1,609 
Service63 49 119 96 
Fire & Security sales932 887 1,801 1,705 
Total segment sales6,120 5,316 11,509 10,080 
Eliminations and other(128)(105)(244)(215)
Net sales$5,992 $5,211 $11,265 $9,865 
Contract Balances

Total contract assets and contract liabilities consisted of the following:

(In millions)June 30,
2023
December 31,
2022
Contract assets, current$578 $537 
Contract assets, non-current (included within Other assets)
Total contract assets586 543 
Contract liabilities, current(483)(449)
Contract liabilities, non-current (included within Other long-term liabilities)
(170)(174)
Total contract liabilities (653)(623)
Net contract assets (liabilities)$(67)$(80)

The timing of revenue recognition, billings and cash collections results in contract assets and contract liabilities. Contract assets relate to the conditional right to consideration for any completed performance under a contract when costs are incurred in excess of billings under the percentage-of-completion methodology. Contract liabilities relate to payments received in advance of performance under a contract or when the Company has a right to consideration that is conditioned upon transfer of a good or service to a customer. Contract liabilities are recognized as revenue as (or when) the Company performs under the contract.
The Company recognized revenue of $264 million during the six months ended June 30, 2023 that related to contract liabilities as of January 1, 2023. The Company expects a majority of its current contract liabilities at the end of the period to be recognized as revenue in the next 12 months.