# ASC 910-20-25: Contractors—Construction — Contract Costs — 25 Recognition

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/910/20/#25-recognition)

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## ASC 910-20-25: 25 Recognition

[Read section](https://asc.understandingaccounting.org/asc/910/20/#25-recognition)

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#### Operating Unit Cost for Construction Equipment

##### [910-20-25-1](https://asc.understandingaccounting.org/asc/910/20/#910-20-25-1)

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Operating unit costs for construction equipment may be included in contract cost using the use rate theory.

##### [910-20-25-2](https://asc.understandingaccounting.org/asc/910/20/#910-20-25-2)

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A rate may be arrived at, which, based on the reported use of the equipment, will serve as a basis for charging the contracts on which the equipment is used. The cost of a contractor's equipment shall be allocated to the particular contract on which it is used on a reasonable basis, such as time, hours of use, or mileage.

##### [910-20-25-3](https://asc.understandingaccounting.org/asc/910/20/#910-20-25-3)

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Idle equipment time, for example if a contractor's equipment is idle during a winter season, may be considered in determining indirect cost allocations. Allocation of idle equipment costs to contracts by use of rates geared to cover all costs is appropriate. That procedure results in rates that lessors of the same type of equipment charge users in the same location, except for the profit element.

#### Small Tools

##### [910-20-25-4](https://asc.understandingaccounting.org/asc/910/20/#910-20-25-4)

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Small tools may be accounted for as inventory or fixed assets. Small tools shall be charged to a contract as they are consumed in performance of the contract. Operating and maintenance costs of miscellaneous small tools and equipment are usually charged to overhead accounts rather than specific contracts. However, a contractor may charge the costs directly to specific contracts if they relate to specific contracts. Small tools can frequently be charged to contracts if purchased for the contracts or if issued from a central pool. Contract costs shall be credited with estimated salvage value of small tools remaining at completion of the contracts.

##### [910-20-25-5](https://asc.understandingaccounting.org/asc/910/20/#910-20-25-5)

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[Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/).