15 Contract balances
Contract assets are recognized in cases where the amount of goods or services transferred to the customer exceeds the amount for which the Group has an unconditional right to payment. Contract assets are regularly reviewed for impairmentindicators. Contract liabilities are recognized in cases where the amount of goods or services transferred to the customer is lower than the consideration received or due.
For new installations and modernization contracts, contract balances are recognized on a contract-by-contract basis once the installation begins. The amounts invoiced to the customerare generally based on the achievement of contractually agreed milestones. Such milestones are typically defined as the dates of contract signature, delivery call-off by the customer, and handover of the goods or services to the customer. Consequently, the amounts recognized as revenue over time do not necessarily coincide with the amounts invoiced.
For maintenance contracts, contract liabilities are recognized for prepaid maintenance services by customers, whereas contract assets are recognized for work performed ahead of the payment being unconditionally due.
|In CHF million||2021||2020|
|New installation and modernization contracts||836||692|
|Total contract assets||897||742|
|New installation and modernization contracts||–2 204||–1 813|
|Total contract liabilities||–2 834||–2 412|
Changes in contract balances are triggered by the progress of projects, business growth, and the timing of down payments received. The Group has recognized CHF 1 655 million as revenue that was included in contract liabilities at the beginning of the reporting year (previous year: CHF 1 360 million). This amount represents new installation and modernization contracts that were completed or further progressed, and the release of contract liabilities related to maintenance contracts. Expected loss allowances relating to contract assets were not material in the reporting year, nor in the previous year.