Contractors—Construction

ASC 910 (Contractors—Construction) supplies incremental industry guidance for entities performing construction-type contracts—unique property built to a customer's specifications, usually at the customer's site, under bid or negotiated fixed-price, unit-price, cost-type, or time-and-materials contracts (910-10-15-1 through 15-4). Since ASU 2014-09 superseded most of its revenue guidance, revenue is now recognized under Topic 606 (910-10-60-1), leaving the Topic to address contract costs and presentation: equipment costs allocated to specific contracts under the "use rate" theory (910-20-25-1 through 25-3; 910-20-30-1), small tools charged as consumed with salvage credited to contract costs (910-20-25-4; 910-10-35-1), noncurrent classification of long-term retainages (910-10-45-1), and proportionate gross presentation for equity-method investments in unincorporated construction or extractive-industry entities (910-10-45-4). The unifying idea is that costs and revenues are accumulated by individual contract over more than one period, so cost allocation and liquidity-focused disclosure (unapproved change orders and claims, progress payments netted against costs, contract durations, retainage collection timing) carry the accounting weight.

Subtopics

1. 10Overall21 ¶

   ASC 910-10 is the Overall subtopic of the Contractors—Construction Topic, providing incremental industry-specific guidance for entities that perform construction-type contracts (work built or improved on tangible property to a customer's specifications, usually at the customer's job site under a unique, bid or negotiated contract). Most of its former revenue guidance was superseded by ASU 2014-09, so revenue recognition now follows Topic 606; what remains addresses small-tool depreciation, classification of retainages, proportionate gross presentation for construction joint ventures, and industry disclosures. Entities in scope must also comply with all other applicable GAAP not addressed here (910-10-15-1).

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2. 20Contract Costs11 ¶

   ASC 910-20 governs how construction contractors account for contract costs, focusing on charging equipment and small tool costs to specific contracts. Equipment cost is allocated to contracts on a reasonable basis (time, hours of use, or mileage) using a "use rate" that considers equipment cost less salvage/rental, probable life, average idle time, and operating costs. It also requires disclosure of unapproved change orders and claims included in contract costs and of progress payments netted against contract costs.

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