United Technologies Corp. (UTX)
Analysis of Revenues
Accounting Policy on Revenue Recognition
SU 2014-09 and its related amendments are effective for reporting periods beginning after December 15, 2017. UTC adopted the New Revenue Standard effective January 1, 2018 and elected the modified retrospective approach. The results for periods before 2018 were not adjusted for the new standard and the cumulative effect of the change in accounting was recognized through retained earnings at the date of adoption.
UTC accounts for revenue in accordance with Accounting Standards Codification (ASC) Topic 606: Revenue from Contracts with Customers. Under Topic 606, a performance obligation is a promise in a contract with a customer to transfer a distinct good or service to the customer. Some of UTC’s contracts with customers contain a single performance obligation, while others contain multiple performance obligations most commonly when a contract spans multiple phases of the product life-cycle such as development, production, maintenance and support. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. When there are multiple performance obligations within a contract, UTC allocates the transaction price to each performance obligation based on its standalone selling price.
UTC considers the contractual consideration payable by the customer and assesses variable consideration that may affect the total transaction price, including contractual discounts, contract incentive payments, estimates of award fees, unfunded contract value under U.S. Government contracts, and other sources of variable consideration, when determining the transaction price of each contract. UTC includes variable consideration in the estimated transaction price when there is a basis to reasonably estimate the amount. These estimates are based on historical experience, anticipated performance and UTC’s best judgment at the time. UTC also considers whether the contracts provide customers with significant financing. Generally, UTC’s contracts do not contain significant financing.
Source: 10-K (filing date: 2019-02-07).
Revenues as Reported
United Technologies Corp., Income Statement, Revenues
US$ in millions
|12 months ended||Dec 31, 2018||Dec 31, 2017||Dec 31, 2016||Dec 31, 2015||Dec 31, 2014|
|Pratt & Whitney|
|Collins Aerospace Systems|
|Eliminations and other|
|Net sales||Amount of revenue recognized from goods sold, services rendered, insurance premiums, or other activities that constitute an earning process. Includes, but is not limited to, investment and interest income before deduction of interest expense when recognized as a component of revenue, and sales and trading gain (loss).||United Technologies Corp.’s net sales increased from 2016 to 2017 and from 2017 to 2018.|