Percent of performance obligation recognized

[Table of Contents](#ie3b4dd133255408488aec6011c49b801_10)APPLIED MATERIALS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Contract balances at the end of each reporting period were as follows:

|  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |
|  | October 31, 2021 |  | October 25, 2020 |
|  | (In millions) |
|  |  |  |  |
| Contract assets | $ | 201  |  |  | $ | 148  |  |
| Contract liabilities | $ | 2,076  |  |  | $ | 1,321  |  |

The increase in contract assets during fiscal 2021, was primarily due to goods transferred to customers where payment was conditional upon technical sign off, offset by the reclassification of contract assets to net accounts receivable upon meeting conditions to the right to payment.During fiscal 2021, Applied recognized revenue of approximately $1.0 billion related to contract liabilities at October 25, 2020. This reduction in contract liabilities was offset by new billings for products and services for which there were unsatisfied performance obligations to customers and revenue had not yet been recognized as of October 31, 2021.There were no credit losses recognized on Applied’s accounts receivables and contract assets during fiscal 2021 and 2020.As of October 31, 2021, the amount of remaining unsatisfied performance obligations on contracts with an original estimated duration of one year or more was approximately $779 million, of which approximately 43% is expected to be recognized within 12 months and the remainder is expected to be recognized within the following 24 months thereafter. Applied has elected the available practical expedient to exclude the value of unsatisfied performance obligations for contracts with an original expected duration of one year or less.  
Note 8      Balance Sheet Detail 

|  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |
|  | October 31,2021 |  | October 25,2020 |
|  |  |  |  |
|   | (In millions) |
| Inventories |  |  |  |
| Customer service spares | $ | 1,251  |  |  | $ | 1,270  |  |
| Raw materials | 1,136  |  |  | 870  |  |
| Work-in-process | 873  |  |  | 624  |  |
| Finished goods | 1,049  |  |  | 1,140  |  |
|  | $ | 4,309  |  |  | $ | 3,904  |  |

 Included in finished goods inventory are $58 million at October 31, 2021 and $16 million at October 25, 2020, of newly-introduced systems at customer locations where the sales transaction did not meet Applied’s revenue recognition criteria as set forth in Note 1. Finished goods inventory includes $380 million and $416 million of evaluation inventory at October 31, 2021 and October 25, 2020, respectively.  


|  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |
|  | October 31,2021 |  | October 25,2020 |
|  |  |  |  |
|   | (In millions) |
| Other Current Assets |  |  |  |
|  |  |  |  |
|  |  |  |  |
| Prepaid income taxes and income taxes receivable | $ | 593  |  |  | $ | 162  |  |
| Prepaid expenses and other | 793  |  |  | 602  |  |
|  | $ | 1,386  |  |  | $ | 764  |  |

  
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