XML 22 R11.htm IDEA: XBRL DOCUMENT v3.20.2
Revenue Recognition
 6 Months Ended
Jun. 30, 2020
Revenue from Contract with Customer [Abstract]  
Revenue Recognition Revenue Recognition
Reconciliation of Total Revenue to Revenue from Contracts with Customers

The following table provides the amount of revenue that is not subject to ASC 606, but is instead governed by other accounting standards:
Three Months Ended June 30,Six Months Ended June 30,
2020201920202019
 (Dollars in millions)
Total revenue$1,799  2,028  3,717  4,058  
Adjustments for non-ASC 606 revenue (1)
(121) (125) (242) (252) 
Total revenue from contracts with customers$1,678  1,903  3,475  3,806  
______________________________________________________________________
(1)Includes regulatory revenue, lease revenue, sublease rental income and revenue from fiber capacity lease arrangements which are not within the scope of ASC 606.

Customer Receivables and Contract Balances

The following table provides balances of customer receivables, contract assets and contract liabilities as of June 30, 2020 and December 31, 2019:
June 30, 2020December 31, 2019
 (Dollars in millions)
Customer receivables (1)
$356  430  
Contract assets13  18  
Contract liabilities294  338  
______________________________________________________________________
(1)Gross customer receivables of $390 million and $462 million, net of allowance for doubtful accounts of $34 million and $32 million, at June 30, 2020 and December 31, 2019, respectively.

Contract liabilities consist of consideration we have received from our customers or billed in advance of providing goods or services promised in the future. We defer recognizing this consideration as revenue until we have satisfied the related performance obligation to the customer. Contract liabilities include recurring services billed one month in advance and installation and maintenance charges that are deferred and recognized over the actual or expected contract term, which ranges from one to five years depending on the service. Contract liabilities are included within deferred revenue in our consolidated balance sheets. During the three and six months ended June 30, 2020, we recognized $13 million and $197 million, respectively, of revenue that was included in contract liabilities as of January 1, 2020. During the three and six months ended June 30, 2019, we recognized $4 million and $265 million, respectively, of revenue that was included in contract liabilities as of January 1, 2019.

Performance Obligations

As of June 30, 2020, our estimated revenue expected to be recognized in the future related to performance obligations associated with existing customer contracts that are unsatisfied (or partially satisfied) is approximately $162 million. We expect to recognize approximately 98% of this revenue through 2022, with the balance recognized thereafter.

These amounts exclude (i) the value of unsatisfied performance obligations for contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed (for example, uncommitted usage or non-recurring charges associated with professional or technical services to be completed), and (ii) contracts that are classified as leasing arrangements that are not subject to ASC 606.
Contract Costs

The following table provides changes in our contract acquisition costs and fulfillment costs:
Three Months Ended June 30, 2020Three Months Ended June 30, 2019
Acquisition CostsFulfillment CostsAcquisition CostsFulfillment Costs
 (Dollars in millions)
Beginning of period balance$84  61  90  57  
Costs incurred13  6  13  15  
Amortization(16) (8) (16) (12) 
End of period balance$81  59  87  60  

Six Months Ended June 30, 2020Six Months Ended June 30, 2019
Acquisition CostsFulfillment CostsAcquisition CostsFulfillment Costs
(Dollars in millions)
Beginning of period balance$86  64  90  57  
Costs incurred27  12  29  19  
Amortization(32) (17) (32) (16) 
End of period balance$81  59  87  60  

Acquisition costs include commission fees paid to employees as a result of obtaining contracts. Fulfillment costs include third party and internal costs associated with the provision, installation and activation of communications services to customers, including labor and materials consumed for these activities.

Deferred acquisition and fulfillment costs are amortized based on the transfer of services on a straight-line basis over the average customer life of 30 months for consumer customers and average contract life of 29 months for business customers. Amortized fulfillment costs are included in cost of services and products and amortized acquisition costs are included in selling, general and administrative expenses in our consolidated statements of operations. The amount of these deferred costs that are anticipated to be amortized in the next twelve months are included in other current assets on our consolidated balance sheets. The amount of deferred costs expected to be amortized beyond the next twelve months is included in other non-current assets on our consolidated balance sheets. Deferred acquisition and fulfillment costs are assessed for impairment on an annual basis.