{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/730/912/","source":"FASB Accounting Standards Codification, Basic View","usage":"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.","number":"730-912","topic":"730","title":"Contractors—Federal Government","area":"Expenses","paragraphs":10,"summary":"This subtopic tells government contractors how to account for best-efforts-basis, research-and-development-cost-sharing arrangements with the federal government. When all six scope conditions in 730-912-15-2 are met (qualifying R&D, contractor retains rights to data/results, best-efforts-only obligation, mutual expectation that costs will exceed funding, no contract combination under 606-10-25-9, and the federal government as sole or principal ultimate customer), the arrangement is not a revenue contract under Topic 606. Instead, costs are expensed as R&D as incurred under Topic 730, and customer funding is recorded as an offset to aggregate R&D expense rather than as contract revenue (730-912-25-1).","concepts":["best-efforts basis arrangement","research and development cost sharing","government contractor","offset to research and development expense","rights to data and results","expectation of costs in excess of funding","follow-on contract uncertainty","combining contracts"],"categories":["Recognition","Revenue","Industry-specific","Presentation"],"level":"intermediate","topic_title":"Research and Development","sections":[{"number":"00","label":"00 Status","anchor":"00-status","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"730-912-00-1","para":"00-1","html":"
The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
ContractsAddedAccounting Standards Update No. 2014-0905/28/2014
CustomerAddedAccounting Standards Update No. 2014-0905/28/2014
RevenueAddedAccounting Standards Update No. 2014-0905/28/2014
912-730-15-2AmendedAccounting Standards Update No. 2014-0905/28/2014
912-730-15-3AmendedAccounting Standards Update No. 2014-0905/28/2014
","snippet":"The following table identifies the changes made to this Subtopic.\nParagraph | Action | Accounting Standards Update | Date |\n| | | |\nContracts | Added | Accounting Standards Update No. 2014-09 | 05/28/2014 |\nCustomer | Ad…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b67e7e2199931df3f25c92adce3b62e6901b20d7f6e68115a4d80caf103ca3ca","downloaded_from":"2026-09-10T01:15:43.389Z","last_downloaded_at":"2026-09-10T01:15:43.389Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478278","source_sha256":"b3afc508170abd503f52a136b1e0adf7a90f018d5777f7dacb7ec83197ab6daf"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:76e86895d79c829b80d8ba907c1aa3717ae641a9776cc0bf8342fff560600084","downloaded_from":"2026-09-10T01:15:43.389Z","last_downloaded_at":"2026-09-10T01:15:43.389Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478278","source_sha256":"b3afc508170abd503f52a136b1e0adf7a90f018d5777f7dacb7ec83197ab6daf"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:15728f05b7cabe86e58f9298d438b9bf171bad6a0fb8f93da876023d64081fde","downloaded_from":"2026-09-10T01:15:43.389Z","last_downloaded_at":"2026-09-10T01:15:43.389Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478278","source_sha256":"b3afc508170abd503f52a136b1e0adf7a90f018d5777f7dacb7ec83197ab6daf"}},{"number":"05","label":"05 Overview and Background","anchor":"05-overview-and-background","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"730-912-05-1","para":"05-1","html":"
This Subtopic provides guidance to government contractors related to identifying research and development activities included in government contracts and the accounting for such activities.
","snippet":"This Subtopic provides guidance to government contractors related to identifying research and development activities included in government contracts and the accounting for such activities.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:bb6d3521211e254e78b5ebc105253b5dca713ea94209aab208b91ffb113e9a6e","downloaded_from":"2026-09-10T01:15:47.207Z","last_downloaded_at":"2026-09-10T01:15:47.207Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478760","source_sha256":"904d0747bffd5dd019b35e9643ff4c8cbc241b46f13ba1da6038fac447f85d43"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d3e206d357e8360207d30998d6aa553b40d0f79b6a54be7b8c17bcff82b2dbf1","downloaded_from":"2026-09-10T01:15:47.207Z","last_downloaded_at":"2026-09-10T01:15:47.207Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478760","source_sha256":"904d0747bffd5dd019b35e9643ff4c8cbc241b46f13ba1da6038fac447f85d43"}},{"block":null,"heading":"Best-Efforts-Basis, Research-and-Development-Cost-Sharing Arrangements","paragraphs":[{"citation":"730-912-05-2","para":"05-2","html":"
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.
","snippet":"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 advance…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8d311380132fa6ecfbc7c5b377e72fa2965206112aef830b28ac9b23eb7960df","downloaded_from":"2026-09-10T01:15:47.207Z","last_downloaded_at":"2026-09-10T01:15:47.207Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478760","source_sha256":"904d0747bffd5dd019b35e9643ff4c8cbc241b46f13ba1da6038fac447f85d43"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6ea96279e439b5515f61b7d4cff13231c4568d710c1fc7d662cc5e37f2db678d","downloaded_from":"2026-09-10T01:15:47.207Z","last_downloaded_at":"2026-09-10T01:15:47.207Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478760","source_sha256":"904d0747bffd5dd019b35e9643ff4c8cbc241b46f13ba1da6038fac447f85d43"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:24697d3d61ef8a12401aa772590ce218824d7695bb3e6dd33c4c823e76986c22","downloaded_from":"2026-09-10T01:15:47.207Z","last_downloaded_at":"2026-09-10T01:15:47.207Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478760","source_sha256":"904d0747bffd5dd019b35e9643ff4c8cbc241b46f13ba1da6038fac447f85d43"}},{"number":"15","label":"15 Scope and Scope Exceptions","anchor":"15-scope-and-scope-exceptions","is_sec":false,"groups":[{"block":null,"heading":"Overall Guidance","paragraphs":[{"citation":"730-912-15-1","para":"15-1","html":"
This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 912-10-15, with specific instrument qualifications noted below.
","snippet":"This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 912-10-15, with specific instrument qualifications noted below.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:940165b2722c151526bb4a06a176c3d9be036ea53a8758eff1f26e25ec87d618","downloaded_from":"2026-09-10T01:15:51.169Z","last_downloaded_at":"2026-09-10T01:15:51.169Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478998","source_sha256":"e5a3b2a1ca079528b85753d1c8a0aab0f42fcaa9445d96a88681d4abdbf2895e"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d98c4aacb02eae91980a7d3a706a04d01841839ee8c1573bd5122a769acc7171","downloaded_from":"2026-09-10T01:15:51.169Z","last_downloaded_at":"2026-09-10T01:15:51.169Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478998","source_sha256":"e5a3b2a1ca079528b85753d1c8a0aab0f42fcaa9445d96a88681d4abdbf2895e"}},{"block":null,"heading":"Instruments","paragraphs":[{"citation":"730-912-15-2","para":"15-2","html":"
This Subtopic applies only to contractual arrangements meeting all of the following conditions:
  1. a
    The activities performed in connection with the contractual arrangement qualify as research and development (see Subtopic 730-10).
  2. b
    The contractor retains a right to the data and results of the research and development activities.
  3. c
    The contractual arrangement obligates the contractor to perform only on a best-efforts basis to achieve the agreed-on objectives of the research and development activity, rather than to deliver a product or service meeting defined performance or other (such as design) specifications.
  4. d
    At the inception of the contract, the contractor and the customer enter into the arrangement with the expectation that costs will be incurred in excess of amounts to be funded. This condition will be met if contractual or other documentation specifically evidences acknowledgment of this expectation by both the contractor and the customer. Implicit in this condition is the existence of significant uncertainty at the date the contractor enters into the arrangement regarding the likelihood of successfully securing follow-on contracts related to the research and development activity.
  5. e
    The research and development arrangement is not combined with other contracts in accordance with the guidance on combining contracts in paragraph 606-10-25-9.
  6. f
    The federal government is the sole or principal expected ultimate customer (including foreign military sales) for the research and development activity or products directly resulting from the research and development activity subject to the arrangements.
","snippet":"This Subtopic applies only to contractual arrangements meeting all of the following conditions:\n(a) The activities performed in connection with the contractual arrangement qualify as research and development (see Subtopi…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7e1e5f6f83223b71931d3edde08034972fd41e1ebd4e25fa61580c3d21112aca","downloaded_from":"2026-09-10T01:15:51.169Z","last_downloaded_at":"2026-09-10T01:15:51.169Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478998","source_sha256":"e5a3b2a1ca079528b85753d1c8a0aab0f42fcaa9445d96a88681d4abdbf2895e"}},{"citation":"730-912-15-3","para":"15-3","html":"
Contractual arrangements meeting all of the conditions in the preceding paragraph differ from contracts with customers addressed in Topic 606 on revenue from contracts with customers. Such activities are research and development as discussed in paragraph 730-10-15-4(c).
","snippet":"Contractual arrangements meeting all of the conditions in the preceding paragraph differ from contracts with customers addressed in Topic 606 on revenue from contracts with customers. Such activities are research and dev…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1195acbb01832a9b5e3230d98f55b087b2bda48f60281ab1e10f19ed59b0bf8e","downloaded_from":"2026-09-10T01:15:51.169Z","last_downloaded_at":"2026-09-10T01:15:51.169Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478998","source_sha256":"e5a3b2a1ca079528b85753d1c8a0aab0f42fcaa9445d96a88681d4abdbf2895e"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0df3395d64c74d6447adc715fac316a07cfe8a7bc55dcfe0c4c6a18f88a179ea","downloaded_from":"2026-09-10T01:15:51.169Z","last_downloaded_at":"2026-09-10T01:15:51.169Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478998","source_sha256":"e5a3b2a1ca079528b85753d1c8a0aab0f42fcaa9445d96a88681d4abdbf2895e"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b481fa568af1c7dec9707d678665abd568ae39ea9e0116a1334149234f79c1b7","downloaded_from":"2026-09-10T01:15:51.169Z","last_downloaded_at":"2026-09-10T01:15:51.169Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478998","source_sha256":"e5a3b2a1ca079528b85753d1c8a0aab0f42fcaa9445d96a88681d4abdbf2895e"}},{"number":"25","label":"25 Recognition","anchor":"25-recognition","is_sec":false,"groups":[{"block":null,"heading":"Best-Efforts-Basis, Research-and-Development-Cost-Sharing Arrangements","paragraphs":[{"citation":"730-912-25-1","para":"25-1","html":"
Best-efforts-basis, research-and-development-cost-sharing arrangements within the scope of this Subtopic (see paragraph 912-730-15-2) shall be recognized as research and development expense as incurred in conformity with Topic 730. Because of the cost-sharing nature of these fixed-price, best-efforts-basis, research-and-development-cost-sharing arrangements, the amounts funded by the customer shall be recognized as an offset to the contractor's aggregate research and development expense rather than as contract revenues. Example 1 (see paragraphs
912-730-55-1 through 55-3
) illustrates the application of this guidance.
","snippet":"Best-efforts-basis, research-and-development-cost-sharing arrangements within the scope of this Subtopic (see paragraph 912-730-15-2) shall be recognized as research and development expense as incurred in conformity with…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8a5552693ac3310c111b2359ddea057d23e6e7606a9f161276ff24ec340cb66d","downloaded_from":"2026-09-10T01:15:58.968Z","last_downloaded_at":"2026-09-10T01:15:58.968Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479532","source_sha256":"e7c97452a0806f4a2b8a5fb89ede9a07a53928f0fbb695cd9c779f69bac91cf5"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:29a02c4ce96b12ef26133bec8addfc0dc9fb2cd96092b9c7adad6459021190d9","downloaded_from":"2026-09-10T01:15:58.968Z","last_downloaded_at":"2026-09-10T01:15:58.968Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479532","source_sha256":"e7c97452a0806f4a2b8a5fb89ede9a07a53928f0fbb695cd9c779f69bac91cf5"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:47704697080324f22af4ba6950526444ca328a2bfda1ecce8099d17d1b70de1c","downloaded_from":"2026-09-10T01:15:58.968Z","last_downloaded_at":"2026-09-10T01:15:58.968Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479532","source_sha256":"e7c97452a0806f4a2b8a5fb89ede9a07a53928f0fbb695cd9c779f69bac91cf5"}},{"number":"55","label":"55 Implementation Guidance and Illustrations","anchor":"55-implementation-guidance-and-illustrations","is_sec":false,"groups":[{"block":null,"heading":"Illustrations","paragraphs":[{"citation":"730-912-55-1","para":"55-1","html":"
This Example illustrates the application of the guidance in paragraph 912-730-25-1 to research and development costs under a best-efforts-basis, research-and-development-cost-sharing arrangement.
","snippet":"This Example illustrates the application of the guidance in paragraph 912-730-25-1 to research and development costs under a best-efforts-basis, research-and-development-cost-sharing arrangement.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1ac03872a47c356fca9efb7e32ae2f18100d8d949b8590f89e2644abf971054b","downloaded_from":"2026-09-10T01:16:00.864Z","last_downloaded_at":"2026-09-10T01:16:00.864Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477222","source_sha256":"7d24a79c299fb4a4534cd1acc1e1d1c2321fe16c5321ad7f495967c73efa5f8d"}},{"citation":"730-912-55-2","para":"55-2","html":"
This Example has the following assumptions:
  1. a
    Estimated aggregate cost to be incurred by contractor in the specified research and development activity: $150
  2. b
    Anticipated reimbursement from customer: $100
  3. c
    As of the current reporting date 50 percent of the estimated aggregate costs have been incurred
  4. d
    Customer has paid 30 percent of its pro rata funding.
","snippet":"This Example has the following assumptions:\n(a) Estimated aggregate cost to be incurred by contractor in the specified research and development activity: $150\n(b) Anticipated reimbursement from customer: $100\n(c) As of t…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:72f909141e0d77c56eef6367fa138db4f4af8c0e49d39a93f7806b8055156a2e","downloaded_from":"2026-09-10T01:16:00.864Z","last_downloaded_at":"2026-09-10T01:16:00.864Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477222","source_sha256":"7d24a79c299fb4a4534cd1acc1e1d1c2321fe16c5321ad7f495967c73efa5f8d"}},{"citation":"730-912-55-3","para":"55-3","html":"
The following table illustrates how to record expenditures for research and development in connection with the XYZ project.
","snippet":"The following table illustrates how to record expenditures for research and development in connection with the XYZ project.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8ce7de1d87fbc3108deb1ee2578fd389f0a97d705cdf48142a45d19e1d8ca88a","downloaded_from":"2026-09-10T01:16:00.864Z","last_downloaded_at":"2026-09-10T01:16:00.864Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477222","source_sha256":"7d24a79c299fb4a4534cd1acc1e1d1c2321fe16c5321ad7f495967c73efa5f8d"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8bcd993bf8c6fef527eee4584fdf73644059bc945553919cb97bb7499499e3ce","downloaded_from":"2026-09-10T01:16:00.864Z","last_downloaded_at":"2026-09-10T01:16:00.864Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477222","source_sha256":"7d24a79c299fb4a4534cd1acc1e1d1c2321fe16c5321ad7f495967c73efa5f8d"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:185c73d7107fc8a6f4a5e950ae7b9b4a3557d7677c8847341a8dc5507257140b","downloaded_from":"2026-09-10T01:16:00.864Z","last_downloaded_at":"2026-09-10T01:16:00.864Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477222","source_sha256":"7d24a79c299fb4a4534cd1acc1e1d1c2321fe16c5321ad7f495967c73efa5f8d"}}],"enrichment":{"summary":"This subtopic tells government contractors how to account for best-efforts-basis, research-and-development-cost-sharing arrangements with the federal government. When all six scope conditions in 730-912-15-2 are met (qualifying R&D, contractor retains rights to data/results, best-efforts-only obligation, mutual expectation that costs will exceed funding, no contract combination under 606-10-25-9, and the federal government as sole or principal ultimate customer), the arrangement is not a revenue contract under Topic 606. Instead, costs are expensed as R&D as incurred under Topic 730, and customer funding is recorded as an offset to aggregate R&D expense rather than as contract revenue (730-912-25-1).","key_points":["The Subtopic applies only if all conditions of 730-912-15-2 are met, including that the activities qualify as research and development under Subtopic 730-10 and the contractor retains a right to the data and results.","The contract must obligate the contractor to perform only on a best-efforts basis toward agreed-on objectives, not to deliver a product or service meeting defined performance or design specifications (730-912-15-2(c)).","At contract inception both parties must expect costs to exceed amounts funded, evidenced by contractual or other documentation, implying significant uncertainty about securing follow-on contracts (730-912-15-2(d)).","The arrangement must not be combined with other contracts under paragraph 606-10-25-9, and the federal government (including foreign military sales) must be the sole or principal expected ultimate customer (730-912-15-2(e)-(f)).","Arrangements in scope differ from contracts with customers under Topic 606 and are research and development as described in paragraph 730-10-15-4(c) (730-912-15-3).","Costs are recognized as research and development expense as incurred in conformity with Topic 730, and amounts funded by the customer are recognized as an offset to aggregate R&D expense rather than as contract revenues (730-912-25-1).","Example 1 (730-912-55-1 through 55-3) illustrates the offset accounting where estimated aggregate costs are $150, anticipated customer reimbursement is $100, 50% of costs have been incurred, and the customer has paid 30% of its pro rata funding."],"categories":["Recognition","Revenue","Industry-specific","Presentation"],"audience_level":"intermediate","student_note":"The exam trap is treating customer funding as revenue: under this Subtopic the reimbursement is netted against R&D expense, not presented as contract revenue, because the arrangement is cost sharing rather than a Topic 606 contract with a customer. Watch the six scope conditions closely—failing even one (e.g., defined performance specifications, or a non-federal ultimate customer) pushes the arrangement back into Topic 606.","related_topics":["730-10","606-10","912-10","912-20","912-235"],"key_concepts":["best-efforts basis arrangement","research and development cost sharing","government contractor","offset to research and development expense","rights to data and results","expectation of costs in excess of funding","follow-on contract uncertainty","combining contracts"],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6e8624dc56f529f3e3a284ce227b92741b692e92adeba3c70860c6f59950998c","downloaded_from":"2026-09-10T01:15:43.389Z","last_downloaded_at":"2026-09-10T01:16:04.136Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"related":[{"number":"730-20","title":"Research and Development Arrangements","topic_title":"Research and Development","score":0.7688,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0ec71d00db366e1ed59ac2deeacfb6d087de8b4eb993a10b6c3131a906d24ba3","downloaded_from":"2026-09-10T01:14:58.781Z","last_downloaded_at":"2026-09-10T01:15:40.514Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"730-10","title":"Overall","topic_title":"Research and Development","score":0.7628,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:07e65ca39a358cb61e979c5786e3d9e96090b9105379557b783faf02096b4933","downloaded_from":"2026-09-10T01:14:28.594Z","last_downloaded_at":"2026-09-10T01:14:54.866Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"810-30","title":"Research and Development Arrangements","topic_title":"Consolidation","score":0.7204,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b077a1257b42951ff034a9d6af5537c1d7704039e20c1a0f6a6924683528a200","downloaded_from":"2026-09-10T01:30:05.404Z","last_downloaded_at":"2026-09-10T01:30:33.354Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"912-20","title":"Contract Costs","topic_title":"Contractors—Federal Government","score":0.7131,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0bfe280d217b7b417bce4d3fcb18f0a6f8e146ea1090fe9a2fef3ba55b3d44a3","downloaded_from":"2026-09-10T02:10:07.952Z","last_downloaded_at":"2026-09-10T02:10:28.388Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"912-10","title":"Overall","topic_title":"Contractors—Federal Government","score":0.6955,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b491a8bf6c78be1caa8f3113b88332e560d735c482fbd65509a292aa2c2a344d","downloaded_from":"2026-09-10T02:09:56.619Z","last_downloaded_at":"2026-09-10T02:10:05.382Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not 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