# ASC 730-912-05: Research and Development — Contractors—Federal Government — 05 Overview and Background

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/730/912/#05-overview-and-background)

Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective.

Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure.

Source downloaded (UTC): 2026-09-10T01:15:47.207Z to 2026-09-10T01:15:47.207Z

Record version: sha256:24697d3d61ef8a12401aa772590ce218824d7695bb3e6dd33c4c823e76986c22

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


## ASC 730-912-05: 05 Overview and Background

[Read section](https://asc.understandingaccounting.org/asc/730/912/#05-overview-and-background)

SEC content: no

##### [730-912-05-1](https://asc.understandingaccounting.org/asc/730/912/#730-912-05-1)

Pending content: no

Source downloaded (UTC): 2026-09-10T01:15:47.207Z to 2026-09-10T01:15:47.207Z

Record version: sha256:bb6d3521211e254e78b5ebc105253b5dca713ea94209aab208b91ffb113e9a6e

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


This Subtopic provides guidance to government contractors related to identifying research and development activities included in government contracts and the accounting for such activities.

#### Best-Efforts-Basis, Research-and-Development-Cost-Sharing Arrangements

##### [730-912-05-2](https://asc.understandingaccounting.org/asc/730/912/#730-912-05-2)

Pending content: no

Source downloaded (UTC): 2026-09-10T01:15:47.207Z to 2026-09-10T01:15:47.207Z

Record version: sha256:8d311380132fa6ecfbc7c5b377e72fa2965206112aef830b28ac9b23eb7960df

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


Contractors may enter into contractual arrangements in which the customer agrees to share the estimated costs of certain research and development activities, for example, the development of a prototype for new or advanced weapons systems. In arrangements to perform on a best-efforts basis, the contractor benefits from both lower net research and development costs and the retention of rights to the research and development results. The knowledge gained from such research and development activities may be used by the contractor in future production activities, including follow-on contracts for full-scale production of products based on the prototypes or models developed during the research and development phase. At the same time, the customer benefits from the arrangement by receiving a nonexclusive right to the results of the research and development effort. Consequently, the customer is able to encourage the contractor to focus its research and development efforts on activities important to the customer's long-range, strategic objectives in areas such as national defense.