REVENUE RECOGNITION | REVENUE RECOGNITION Contract Balances The following table presents the components of our contract balances: As of June 30, December 31, Trade accounts receivable and contract assets, net: Sales and services $ 157,459 $ 152,632 Leasing 4,110 4,016 Total trade accounts receivable 161,569 156,648 Contract assets 38,223 63,758 Allowance for doubtful accounts (16,413) (23,777) Total trade accounts receivable and contract assets, net $ 183,379 $ 196,629 Contract liabilities: Current $ 89,831 $ 101,060 Non-current 11,048 10,572 Total contract liabilities $ 100,879 $ 111,632 The following table presents the revenue recognized in the Condensed Consolidated Statements of Operations that was previously included within contract liabilities: For the three months ended June 30, For the six months ended June 30, 2020 2019 2020 2019 Revenue $ 7,614 $ 8,290 $ 59,786 $ 47,773 The following table presents the activity in our allowance for doubtful accounts: For the six months ended June 30, 2020 2019 Balance at beginning of period $ 23,777 $ 16,604 Credit losses (1) 4,393 18,862 Deductions (10,546) (10,053) Foreign currency translation (1,211) 173 Balance at end of period $ 16,413 $ 25,586 (1) The impact of adopting ASC 326 on January 1, 2020 was a net decrease to our allowance for doubtful accounts largely driven by a $13.4 million reclassification to Other current assets, net and Other non-current assets, net , offset by a $2.9 million adjustment to Accumulated earnings (losses) . Contract Acquisition Costs The following table presents the activity in our contract acquisition costs, net: For the six months ended June 30, 2020 2019 Balance at beginning of period $ 113,592 $ 114,306 Additions 49,366 47,277 Amortization expense (51,265) (47,762) Foreign currency translation (4,607) 97 Balance at end of period $ 107,086 $ 113,918 We recognized amortization expenses related to contract acquisition costs of $25.6 million and $24.3 million for the three months ended June 30, 2020 and 2019, respectively. Transaction Price Allocated to Remaining Performance Obligations As of June 30, 2020, the remaining performance obligations for our customer contracts with original expected durations of more than one year was $691.0 million. We expect to recognize 40.2% of our remaining performance obligations of these contracts as revenue in the next twelve months. This amount e xcludes agreements with consumer customers in our Hughes segment, our leasing arrangements and agreements with certain customers under which collectability of all amounts due through the term of contracts is uncertain. Disaggregation of Revenue Geographic Information The following table presents our revenue from customer contracts disaggregated by primary geographic market and by segment: Hughes ESS Corporate and Other Consolidated For the three months ended June 30, 2020 North America $ 384,623 $ 4,179 $ 2,015 $ 390,817 South and Central America 33,961 — 100 34,061 Other 34,588 — — 34,588 Total revenue $ 453,172 $ 4,179 $ 2,115 $ 459,466 For the three months ended June 30, 2019 North America $ 372,398 $ 3,742 $ 4,739 $ 380,879 South and Central America 30,395 — 103 30,498 Other 49,054 — — 49,054 Total revenue $ 451,847 $ 3,742 $ 4,842 $ 460,431 For the six months ended June 30, 2020 North America $ 767,338 $ 8,831 $ 4,455 $ 780,624 South and Central America 67,917 — 192 68,109 Other 76,399 — — 76,399 Total revenue $ 911,654 $ 8,831 $ 4,647 $ 925,132 For the six months ended June 30, 2019 North America $ 740,227 $ 7,775 $ 9,611 $ 757,613 South and Central America 57,258 — 243 57,501 Other 99,699 — — 99,699 Total revenue $ 897,184 $ 7,775 $ 9,854 $ 914,813 Nature of Products and Services The following tables presents our revenue disaggregated by the nature of products and services and by segment for the three and six months ended June 30, 2020 and 2019: Hughes ESS Corporate and Other Consolidated For the three months ended June 30, 2020 Services and other revenue: Services $ 399,697 $ 2,564 $ 993 $ 403,254 Lease revenue 11,052 1,615 1,122 13,789 Total services and other revenue 410,749 4,179 2,115 417,043 Equipment revenue: Equipment 18,518 — — 18,518 Design, development and construction services 22,668 — — 22,668 Lease revenue 1,237 — — 1,237 Total equipment revenue 42,423 — — 42,423 Total revenue $ 453,172 $ 4,179 $ 2,115 $ 459,466 For the three months ended June 30, 2019 Services and other revenue: Services $ 381,608 $ 2,400 $ 1,715 $ 385,723 Lease revenue 12,594 1,342 3,127 17,063 Total services and other revenue 394,202 3,742 4,842 402,786 Equipment revenue: Equipment 30,597 — — 30,597 Design, development and construction services 25,860 — — 25,860 Lease revenue 1,188 — — 1,188 Total equipment revenue 57,645 — — 57,645 Total revenue $ 451,847 $ 3,742 $ 4,842 $ 460,431 Hughes ESS Corporate and Other Consolidated For the six months ended June 30, 2020 Services and other revenue: Services $ 789,697 $ 5,329 $ 2,281 $ 797,307 Lease revenue 22,225 3,502 2,366 28,093 Total services and other revenue 811,922 8,831 4,647 825,400 Equipment revenue: Equipment 43,357 — — 43,357 Design, development and construction services 54,225 — — 54,225 Lease revenue 2,150 — — 2,150 Total equipment revenue 99,732 — — 99,732 Total revenue $ 911,654 $ 8,831 $ 4,647 $ 925,132 For the six months ended June 30, 2019 Services and other revenue: Services $ 762,391 $ 5,217 $ 3,452 $ 771,060 Lease revenue 25,434 2,558 6,402 34,394 Total services and other revenue 787,825 7,775 9,854 805,454 Equipment revenue: Equipment 56,557 — — 56,557 Design, development and construction services 50,926 — — 50,926 Lease revenue 1,876 — — 1,876 Total equipment revenue 109,359 — — 109,359 Total revenue $ 897,184 $ 7,775 $ 9,854 $ 914,813 Lease Revenue The following table presents our lease revenue by type of lease: For the three months ended June 30, For the six months ended June 30, 2020 2019 2020 2019 Sales-type lease revenue: Revenue at lease commencement $ 1,237 $ 1,188 $ 2,150 $ 1,876 Interest income 95 258 164 510 Total sales-type lease revenue 1,332 1,446 2,314 2,386 Operating lease revenue 13,694 16,805 27,929 33,884 Total lease revenue $ 15,026 $ 18,251 $ 30,243 $ 36,270 Substantially all of our net investment in sales-type leases consisted of lease receivables totaling $9.4 million and $6.5 million as of June 30, 2020 and December 31, 2019, respectively. The following table presents future operating lease payments to be received as of June 30, 2020: Amounts Year ending December 31, 2020 (remainder) $ 25,789 2021 36,045 2022 34,126 2023 32,127 2024 29,733 2025 and beyond 127,816 Total lease payments $ 285,636 The following table presents amounts for assets subject to operating leases, which are included in Property and equipment, net : As of June 30, 2020 December 31, 2019 Cost Accumulated Depreciation Net Cost Accumulated Depreciation Net Customer premises equipment $ 1,470,861 $ (1,143,997) $ 326,864 $ 1,377,914 $ (1,043,431) $ 334,483 Satellites 104,620 (34,847) 69,773 104,620 (31,360) 73,260 Real estate 47,978 (16,606) 31,372 46,930 (16,048) 30,882 Total $ 1,623,459 $ (1,195,450) $ 428,009 $ 1,529,464 $ (1,090,839) $ 438,625 The following table presents depreciation expense for assets subject to operating leases, which is included in Depreciation and amortization : For the three months ended June 30, For the six months ended June 30, 2020 2019 2020 2019 Customer premises equipment $ 54,845 $ 46,839 $ 100,566 $ 92,651 Satellites 1,743 1,738 3,487 3,475 Real estate 233 558 465 1,116 Total $ 56,821 $ 49,135 $ 104,518 $ 97,242 |