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Financing Receivables (Tables)
3 Months Ended
Mar. 31, 2020
Financing Receivables  
Summary of the components of financing receivables

    

Investment in

    

    

    

Client Loan and

    

    

Sales-Type and

Commercial

Installment Payment

(Dollars in millions)

Direct Financing

Financing

Receivables

At March 31, 2020:

Leases

Receivables

(Loans)

Total

Financing receivables, gross

$

5,479

$

2,334

$

12,605

$

20,418

Unearned income

 

(471)

(3)

(517)

(991)

Residual value*

 

646

646

Amortized cost

$

5,654

$

2,331

$

12,087

$

20,072

Allowance for credit losses

 

(79)

(12)

(147)

(238)

Total financing receivables, net

$

5,575

$

2,319

$

11,940

$

19,834

Current portion

$

2,112

$

2,319

$

7,695

$

12,126

Noncurrent portion

$

3,463

$

$

4,245

$

7,708

* Includes guaranteed and unguaranteed residual value.

    

Investment in

    

    

    

Client Loan and

    

    

Sales-Type and

Commercial

Installment Payment

(Dollars in millions)

Direct Financing

Financing

Receivables

At December 31, 2019:

Leases

Receivables

(Loans)

Total

Financing receivables, gross

$

6,077

$

3,836

$

13,592

$

23,504

Unearned income

 

(509)

(4)

(570)

(1,083)

Recorded investment

$

5,567

$

3,831

$

13,022

$

22,421

Allowance for credit losses

 

(72)

(11)

(138)

(221)

Unguaranteed residual value

 

652

652

Guaranteed residual value

 

53

53

Total financing receivables, net

$

6,199

$

3,820

$

12,884

$

22,904

Current portion

$

2,334

$

3,820

$

8,037

$

14,192

Noncurrent portion

$

3,865

$

$

4,847

$

8,712

Schedule of financing receivables and allowance for credit losses by portfolio segment

(Dollars in millions)

    

    

    

    

    

    

    

    

At March 31, 2020:

Americas

EMEA

Asia Pacific

Total

Amortized cost

 

  

 

  

 

  

 

  

Lease receivables

$

3,609

$

1,122

$

923

$

5,654

Loan receivables

 

6,151

 

3,663

2,273

12,087

Ending balance

$

9,760

$

4,785

$

3,196

$

17,741

Allowance for credit losses

 

  

 

  

 

  

 

  

Beginning balance at December 31, 2019

$

120

$

54

$

36

$

210

Adjustment for adoption of new standard

21

15

5

41

Beginning balance at January 1, 2020

  

  

  

Lease receivables

$

44

$

27

$

18

$

89

Loan receivables

 

98

 

42

22

163

Total

$

142

$

69

$

41

$

252

Write-offs

$

(16)

$

(1)

$

(2)

$

(19)

Recoveries

 

0

 

1

1

Provision

 

3

 

7

(1)

9

Other*

 

(13)

 

(2)

(1)

(16)

Ending balance at March 31, 2020

$

117

$

73

$

36

$

226

Lease receivables

$

41

$

23

$

15

$

79

Loan receivables

$

75

$

50

$

22

$

147

*

 Primarily represents translation adjustments.

(Dollars in millions)

    

    

    

    

    

    

    

    

At December 31, 2019:

Americas

EMEA

Asia Pacific

Total

Recorded investment

 

  

 

  

 

  

 

  

Lease receivables

$

3,419

$

1,186

$

963

$

5,567

Loan receivables

 

6,726

 

3,901

2,395

13,022

Ending balance

$

10,144

$

5,087

$

3,359

$

18,590

Recorded investment collectively evaluated for impairment

$

10,032

$

5,040

$

3,326

$

18,399

Recorded investment individually evaluated for impairment

$

112

$

47

$

32

$

191

Allowance for credit losses

 

  

 

  

 

  

 

  

Beginning balance at January 1, 2019

 

  

 

  

 

  

 

  

Lease receivables

$

53

$

22

$

24

$

99

Loan receivables

 

105

 

43

32

179

Total

$

158

$

65

$

56

$

279

Write-offs

$

(42)

$

(3)

$

(18)

$

(63)

Recoveries

 

1

 

0

1

2

Provision

 

5

 

(7)

(3)

(5)

Other*

 

(1)

 

0

(1)

(2)

Ending balance at December 31, 2019

$

120

$

54

$

36

$

210

Lease receivables

$

33

$

23

$

16

$

72

Loan receivables

$

88

$

31

$

20

$

138

Related allowance, collectively evaluated for impairment

$

25

$

11

$

4

$

39

Related allowance, individually evaluated for impairment

$

96

$

43

$

32

$

171

* Primarily represents translation adjustments.

Schedule of past due financing receivables

    

    

    

    

    

Amortized

    

Billed

    

Total

Amortized

Cost

Invoices

Amortized

(Dollars in millions)

Amortized

Cost

> 90 Days and

> 90 Days and

Cost Not

At March 31, 2020:

Cost

> 90 Days (1)

Accruing (1)

Accruing

Accruing (2)

Americas

$

3,609

$

144

$

110

$

8

$

40

EMEA

 

1,122

20

6

0

16

Asia Pacific

 

923

24

13

1

10

Total lease receivables

$

5,654

$

188

$

129

$

9

$

65

Americas

$

6,151

$

115

$

62

$

11

$

54

EMEA

 

3,663

74

7

3

69

Asia Pacific

 

2,273

27

10

1

17

Total loan receivables

$

12,087

$

215

$

80

$

16

$

140

Total

$

17,741

$

403

$

209

$

26

$

206

(1)At a contract level, which includes total billed and unbilled amounts for financing receivables aged greater than 90 days.
(2)Of the amortized cost not accruing, there was a related allowance of $148 million. Financing income recognized on these receivables was immaterial for the three months ended March 31, 2020.

    

    

    

    

    

Recorded

    

Billed

    

Recorded

Total

Recorded

Investment

Invoices

Investment

(Dollars in millions)

Recorded

Investment

> 90 Days and

> 90 Days and

Not

At December 31, 2019:

Investment

> 90 Days (1)

Accruing (1)

Accruing

Accruing (2)

Americas

$

3,419

$

187

$

147

$

11

$

41

EMEA

 

1,186

28

13

2

17

Asia Pacific

 

963

19

7

1

11

Total lease receivables

$

5,567

$

234

$

168

$

14

$

69

Americas

$

6,726

$

127

$

71

$

11

$

72

EMEA

 

3,901

77

8

3

72

Asia Pacific

 

2,395

26

6

2

21

Total loan receivables

$

13,022

$

231

$

85

$

15

$

166

Total

$

18,590

$

465

$

253

$

29

$

235

(1)At a contract level, which includes total billed and unbilled amounts for financing receivables aged greater than 90 days.
(2)Of the recorded investment not accruing, $191 million was individually evaluated for impairment with a related allowance of $171 million.

Schedule of net recorded investment by credit quality indicator

(Dollars in millions)

Americas

    

EMEA

    

Asia Pacific

At March 31, 2020:

    

Aaa – Baa3

    

Ba1 – D

    

Aaa – Baa3

    

Ba1 – D

    

Aaa – Baa3

    

Ba1 – D

Vintage year:

 

  

 

  

 

  

 

  

 

  

 

  

2020

$

1,422

$

883

$

633

$

806

$

251

$

163

2019

2,213

1,601

966

1,043

1,607

678

2018

 

1,148

736

400

359

208

82

2017

 

722

386

141

191

79

37

2016

 

292

309

94

68

36

20

2015 and prior

 

18

30

45

40

20

16

Total

$

5,815

$

3,945

$

2,278

$

2,506

$

2,200

$

996

(Dollars in millions)

Lease Receivables

Loan Receivables

At December 31, 2019:

    

Americas

    

EMEA

    

Asia Pacific

    

Americas

    

EMEA

    

Asia Pacific

Credit rating:

 

  

 

  

 

  

 

  

 

  

 

  

Aaa – Aa3

$

465

$

54

$

43

$

1,028

$

193

$

189

A1 – A3

 

750

181

454

1,186

395

892

Baa1 – Baa3

 

955

409

147

1,882

1,527

619

Ba1 – Ba2

 

746

326

154

1,513

921

388

Ba3 – B1

 

215

140

101

471

564

205

B2 – B3

 

242

50

47

522

253

72

Caa – D

 

13

2

2

36

18

10

Total

$

3,385

$

1,162

$

947

$

6,638

$

3,871

$

2,376