Note 8
Receivables, net and Contract assets and liabilities

“Receivables, net” consisted of the following:

December 31, ($ in millions)

2018

2017

Trade receivables

5,970

5,553

Other receivables

635

510

Allowance

(219)

(202)

Total

6,386

5,861

“Trade receivables” in the table above includes contractual retention amounts billed to customers of $176 million and $168 million at December 31, 2018 and 2017, respectively. Management expects that the substantial majority of related contracts will be completed and the substantial majority of the billed amounts retained by the customer will be collected. Of the retention amounts outstanding at December 31, 2018, 62 percent and 28 percent are expected to be collected in 2019 and 2020, respectively.

“Other receivables” in the table above consists of value added tax, claims, rental deposits and other non-trade receivables.

The reconciliation of changes in the allowance for doubtful accounts is as follows:

($ in millions)

2018

2017

2016

Balance at January 1,

202

202

160

Additions

126

61

116

Deductions

(93)

(74)

(64)

Exchange rate differences

(16)

13

(10)

Balance at December 31,

219

202

202

The following table provides information about Contract assets and Contract liabilities:

($ in millions)

2018

2017

2016

Contract assets

1,082

1,141

1,222

Contract liabilities

1,707

1,792

1,690

Contract assets primarily relate to the Company’s right to receive consideration for work completed but for which no invoice has been issued at the reporting date. Contract assets are transferred to receivables when rights to receive payment become unconditional. Management expects that the majority of the amounts will be collected within one year of the respective balance sheet date.

Contract liabilities primarily relate to up-front advances received on orders from customers as well as amounts invoiced to customers in excess of revenues recognized predominantly on long-term projects. Contract liabilities are reduced as work is performed and as revenues are recognized.

The significant changes in the Contract assets and Contract liabilities balances were as follows:

 

2018

2017

($ in millions)

Contract
assets

Contract
liabilities

Contract
assets

Contract
liabilities

Revenue recognized, which was included in the Contract liabilities balance at Jan 1, 2018/2017

 

(879)

 

(1,212)

Additions to Contract liabilities – excluding amounts recognized as revenue during the period

 

518

 

868

Receivables recognized that were included in the Contract assets balance at Jan 1, 2018/2017

(633)

 

(584)

 

At December 31, 2018, the Company had unsatisfied performance obligations totaling $13,084 million and, of this amount, the Company expects to fulfill approximately 76 percent of the obligations in 2019, approximately 14 percent of the obligations in 2020 and the balance thereafter.