CONTRACT ASSETS AND LIABILITIES

9 Months Ended

Sep. 27, 2020

Revenue from Contract with Customer [Abstract]

CONTRACT ASSETS AND LIABILITIES

CONTRACT ASSETS AND LIABILITIES

Contract assets include unbilled amounts typically resulting from sales under contracts when the percentage-of-completion cost-to-cost method of revenue recognition is utilized and revenue recognized exceeds the amount billed to the customer. Contract liabilities include advance payments and billings in excess of revenue recognized. Contract assets and contract liabilities were as follows (in millions):

	September 27, 2020		December 31, 2019
Contract assets	$	10,388	$	9,094
Contract liabilities	7,354		7,054

Contract assets increased $1.3 billion during the nine months ended September 27, 2020, primarily due to the recognition of revenue related to the satisfaction or partial satisfaction of performance obligations during the nine months ended September 27, 2020 for which we have not yet billed our customers. There were no significant credit or impairment losses related to our contract assets during the quarters and nine months ended September 27, 2020 and September 29, 2019.

Contract liabilities increased $300 million during the nine months ended September 27, 2020, primarily due to payments received in excess of revenue recognized on these performance obligations. During the quarter and nine months ended September 27, 2020, we recognized $919 million and $3.5 billion of our contract liabilities that existed at December 31, 2019 as revenue. During the quarter and nine months ended September 29, 2019, we recognized $688 million and $3.6 billion of our contract liabilities at December 31, 2018 as revenue.