Quarterly report pursuant to Section 13 or 15(d)

Inventory

v3.21.2
Inventory
6 Months Ended
Jun. 30, 2021
Inventory Disclosure [Abstract]  
Inventory Inventory
Inventory consisted of (in millions):
June 30,
2021
December 31,
2020
Completed VOI inventory $ 1,085  $ 1,049 
Estimated VOI recoveries, net 206  246 
VOI construction in process 31  30 
Inventory sold subject to repurchase 13  13 
Vacation exchange credits and other
Land held for VOI development
Total inventory $ 1,339  $ 1,347 

The Company had net transfers of VOI inventory to property and equipment of $11 million and $13 million during the six months ended June 30, 2021 and 2020.

During 2020, as a result of resort closures and cancellations surrounding COVID-19, the Company recorded $48 million of reductions to exchange inventory consisting of costs previously incurred by RCI to provide enhanced out-of-network travel
options to members. These write-offs were included within Operating expenses on the Condensed Consolidated Statements of Income/(Loss), $38 million of which is included in the results for the six months ended June 30, 2020. The Company anticipates that remaining inventory will be fully utilized to maximize exchange supply for its members in 2021 and beyond.

Inventory Sale Transactions
During 2020, the Company acquired properties in Orlando, Florida, and Moab, Utah, from third-party developers for vacation ownership inventory and property and equipment.

During 2013, the Company sold real property located in Las Vegas, Nevada, to a third-party developer, consisting of vacation ownership inventory and property and equipment. The Company recognized no gain or loss on this sale transaction.

In accordance with the agreements with the third-party developers, the Company has conditional rights and conditional obligations to repurchase the completed properties from the developers subject to the properties conforming to the Company's vacation ownership resort standards and provided that the third-party developers have not sold the properties to another party. Under the sale of real estate accounting guidance, the conditional rights and obligations of the Company constitute continuing involvement and thus the Company was unable to account for these transactions as a sale.

The following table summarizes the activity related to the Company’s inventory obligations (in millions):
Las Vegas (a)
Moab (a)
Orlando (a)
Other (b)
Total
December 31, 2020 $ 13  $ 31  $ 22  $ 17  $ 83 
Purchases 25  39  67 
Payments (2) (56) (5) (46) (109)
June 30, 2021 $ 13  $ —  $ 18  $ 10  $ 41 
December 31, 2019 $ 43  $ —  $ —  $ $ 49 
Purchases 15  —  —  70  85 
Payments (19) —  —  (65) (84)
June 30, 2020 $ 39  $ —  $ —  $ 11  $ 50 
(a)Included in Accrued expenses and other liabilities on the Condensed Consolidated Balance Sheets.
(b)Included in Accounts payable on the Condensed Consolidated Balance Sheets.

The Company has committed to repurchase the completed property located in Las Vegas, Nevada, from a third-party developer subject to the property meeting the Company’s vacation ownership resort standards and provided that the third-party developer has not sold the property to another party. The maximum potential future payments that the Company may be required to make under this commitment was $65 million as of June 30, 2021.