# ASC 912-10-05: Contractors—Federal Government — Overall — 05 Overview and Background Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/912/10/#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): 2026-09-10T02:10:00.188Z to 2026-09-10T02:10:00.188Z Record version: sha256:3e7f23a4ef40074d983c79b9857e8d1f0447c0932d6e6a99a19074a4a556c167 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 912-10-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/912/10/#05-overview-and-background) SEC content: no ##### [912-10-05-1](https://asc.understandingaccounting.org/asc/912/10/#912-10-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:10:00.188Z to 2026-09-10T02:10:00.188Z Record version: sha256:bc9fe78a7abf3255d3b5ab46849228c47b60a2e3351ebaf3dcddf61c3d1d8794 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Contractors—Federal Government Topic provides incremental guidance for government contractors. See also Subtopic 910-20. ##### [912-10-05-2](https://asc.understandingaccounting.org/asc/912/10/#912-10-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:10:00.188Z to 2026-09-10T02:10:00.188Z Record version: sha256:3ce9f300f53d2696edd4a5e711fe398da63e2207fb10f02de8be8ecf3e072710 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Topic includes the following Subtopics: 1. a Overall 2. b Contract Costs 3. c [Subparagraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). 4. d Income Statement 5. e [Subparagraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). 6. f Changing Prices 7. g Risks and Uncertainties 8. h Receivables 9. i Inventory 10. j Liabilities 11. k Contingencies 12. l [Subparagraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). 13. m Cost of Sales and Services 14. n Compensation—Retirement Benefits 15. o Research and Development 16. p Interest. ##### [912-10-05-3](https://asc.understandingaccounting.org/asc/912/10/#912-10-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:10:00.188Z to 2026-09-10T02:10:00.188Z Record version: sha256:db0bc401147fc8ac8042bededa743759007c9c0038100b7706e96e85536a6cb4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entities electing to do business with the federal government will find a customer who behaves, in some significant ways, very differently from commercial customers. This unique behavior results from the customer being a sovereign power that conducts its procurement activities under specific laws and implementing regulations. These procurement statutes and regulations govern the process the federal government must follow in its business dealings with private industry. They cover such critical matters as how the federal government selects, monitors, and pays its contractors. ##### [912-10-05-4](https://asc.understandingaccounting.org/asc/912/10/#912-10-05-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:10:00.188Z to 2026-09-10T02:10:00.188Z Record version: sha256:f928083f93593f44a1afad71ed47c190183c0e108e8d07c1bb2dabb84aac6c8b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. While most industries include entities that are government contractors, certain industries are more heavily involved in providing goods and services to the government. These industries include manufacturing, architect-engineering, professional services, construction, aerospace, shipbuilding, and technology. ##### [912-10-05-5](https://asc.understandingaccounting.org/asc/912/10/#912-10-05-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:10:00.188Z to 2026-09-10T02:10:00.188Z Record version: sha256:63b510dbfcfb72427414fe634ba982a991dc7a380f808d124021ad12ca2f600b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entities engaged in government contracting are subject to the risks associated with their respective industries, as well as additional risks that generally are not encountered by other business entities in the commercial sector. These additional risks are caused principally by the highly regulated environment in which government contractors operate. Such risks include, but are not necessarily limited to, all of the following: 1. a Contractors are subject to extensive and complex cost accounting and other regulations, and in some circumstances, significant penalties even for violations of relatively immaterial dollar amounts (such as penalties under the False Claims Act). 2. b Business and accounting practices are subject to frequent scrutiny by the government. 3. c The government has unilateral rights not found in commercial relationships. 4. d If contracts or contract changes are negotiated based on cost, cost accounting considerations play a vital role in pricing and administering government contracts and, consequently, determining the contractor's reported financial position and results of operations.