ASC 330-912

Contractors—Federal Government

330 Inventory

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In brief

IntermediateIndustry-specific Recognition Disclosure Inventory and PP&E

This Subtopic gives government contractors narrow guidance on inventory affected by contracts terminated for the convenience of the government, plus disclosure of the accounting policy for costs included in contract inventory. If inventory whose costs are in the termination claim is later reacquired by the contractor, the reacquisition value is recorded as a purchase; in "no-cost settlements," where the contractor waives its claim, no sale transaction arises and retained inventory is accounted for under ordinary inventory methods rather than as a purchase.

Key points (6)

This Subtopic addresses inventory reacquired in a contract termination for the convenience of the government and the costs included in contract inventory (330-912-05-1).
Scope follows Section 912-10-15, the Overall Subtopic for federal government contractors (330-912-15-1).
Inventory items whose costs are included in a termination claim and later reacquired by the contractor are recorded at reacquisition value as a purchase, applied per paragraph 912-310-35-1 (330-912-25-1).
In no-cost settlements, where the contractor waives its right to make a claim, there is no transaction to reflect in sales; contract costs keep their usual classification and retained inventory is accounted for under normal inventory methods and standards, not as a purchase (330-912-25-2).
Guidance on inventory retained or sold to outsiders relating to contracts terminated for the government's convenience is in paragraphs 912-310-25-4 through 25-5 (330-912-25-3).
A contractor must disclose its accounting policies with respect to costs included in inventory (330-912-50-1).

For students. Tested point: reacquisition of inventory covered by a termination claim is a purchase, but inventory retained in a no-cost settlement is not — students often incorrectly record a sale or purchase in the no-cost case when no transaction has occurred.

contract termination for convenience of the government termination claim reacquired inventory no-cost settlement contract inventory inventory accounting policy disclosure government contractor

Machine-generated study aid for ASC 330-912. Check the source paragraphs below.

330-912-00Status

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330-912-00-1

No updates have been made to this subtopic.

330-912-05Overview and Background

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330-912-05-1

This Subtopic provides guidance to government contractors related to inventory reacquired in a contract termination for the convenience of the government and the costs included in contract inventory.

330-912-15Scope and Scope Exceptions

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Overall Guidance

330-912-15-1

This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 912-10-15.

330-912-25Recognition

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Termination Claims

330-912-25-1

If inventory items whose costs are included in the termination claim are subsequently reacquired by the contractor the reacquisition value of those items shall be recorded as a purchase and applied in accordance with the guidance in paragraph 912-310-35-1.

330-912-25-2

So called no-cost settlements—those in which the contractor waives the right to make a claim—result in no transaction that could be reflected in sales. The costs applicable to the contract shall be given their usual classification. The inventory retained shall not be treated as a purchase but shall be accounted for according to the usual methods and standards applicable to inventories.

330-912-25-3

For a discussion of inventory retained or sold to outsiders that relates to terminated contracts for the convenience of the government, see paragraphs

912-310-25-4 through 25-5

330-912-50Disclosure

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Contract Inventory

330-912-50-1

A contractor's accounting policies with respect to costs included in inventory shall be disclosed.