# ASC 912-20-25: Contractors—Federal Government — Contract Costs — 25 Recognition Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/912/20/#25-recognition) 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): 2026-09-10T02:10:21.617Z to 2026-09-10T02:10:21.617Z Record version: sha256:7fd8b4ad78e922be57fe22e6753fd93f82c6a5c5cf9544da3555f30257c32f36 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 912-20-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/912/20/#25-recognition) SEC content: no #### Costs Allocated to Contracts ##### [912-20-25-1](https://asc.understandingaccounting.org/asc/912/20/#912-20-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:10:21.617Z to 2026-09-10T02:10:21.617Z Record version: sha256:211932e993cd062d074d064cf9ebafb1d3db0d478f7d6d46ebfa2e458863d770 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Indirect costs that are allowable or allocable under pertinent government contract regulations may be allocated to federal government contracts as indirect costs if otherwise allowable under generally accepted accounting principles (GAAP) . ##### [912-20-25-2](https://asc.understandingaccounting.org/asc/912/20/#912-20-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:10:21.617Z to 2026-09-10T02:10:21.617Z Record version: sha256:dbf327c90eb76653fcf773c9c9139f0ffd4b74b7ad19c7e8b8b500fc247a3a6a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). #### Convenience Terminations ##### [912-20-25-3](https://asc.understandingaccounting.org/asc/912/20/#912-20-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:10:21.617Z to 2026-09-10T02:10:21.617Z Record version: sha256:ee155183b37aa738bbf5bbbafdd2360119dc34934aff0a460238695fc4ac989a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Subcontractor claims](https://asc.understandingaccounting.org/glossary/s/#subcontractor-claims "Those obligations of a contractor to a subcontractor that arise from the subcontractor's costs incurred through transactions that were related to a contract terminated but did not result in the transfer of billable materials or services to the contractor before termination.") and other vendor claims shall be recorded as liabilities at the estimated amounts payable in conformity with the provisions of Subtopic 450-20. To the extent such amounts are recoverable by the prime contractor, they shall be included as part of the claim. #### Default Terminations ##### [912-20-25-4](https://asc.understandingaccounting.org/asc/912/20/#912-20-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:10:21.617Z to 2026-09-10T02:10:21.617Z Record version: sha256:7c8bddd393d9b649a65d58c72cc4c6d9eabba813ec30d95ca7380e6fb6130501 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The rights of the contracting parties in a default termination of a fixed-price contract differ significantly from those in a convenience termination; consequently, the accounting must reflect these differences. Contractors shall record, in addition to normal contract liabilities, those liabilities arising from a default termination (for example, damages, excess reprocurement costs, and progress payments to be repaid). ##### [912-20-25-5](https://asc.understandingaccounting.org/asc/912/20/#912-20-25-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:10:21.617Z to 2026-09-10T02:10:21.617Z Record version: sha256:3b20fbec9b8b3187aaa446a9b22b52aa4e32743aac9b3ab8b3f4c0abe9026199 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If termination for default results in a reduction of previously recorded earnings the resulting income effect shall be included in the loss on termination of the contract in the current period as a change in an accounting estimate in conformity with Subtopic 250-10. In such circumstances, adjustments of prior-period amounts are not appropriate. #### Program Accounting ##### [912-20-25-5A](https://asc.understandingaccounting.org/asc/912/20/#912-20-25-5A) Pending content: no Source downloaded (UTC): 2026-09-10T02:10:21.617Z to 2026-09-10T02:10:21.617Z Record version: sha256:01ef39596388f157741a781827e40395a9ceb7b19f4bfdfbc0802c622fdf7164 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Program accounting is a method of accounting for the costs of certain products manufactured for delivery under production-type contracts. Under this method, costs are accumulated and accounted for by programs rather than by individual units or individual contracts. A program consists of the estimated number of units of a product to be produced by an entity in a continuing, long-term production effort for delivery under existing and anticipated contracts. The program is used as the accounting cost center for accumulating costs and allocating costs to cost of sales. ##### [912-20-25-6](https://asc.understandingaccounting.org/asc/912/20/#912-20-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:10:21.617Z to 2026-09-10T02:10:21.617Z Record version: sha256:21cefc03f853e94db475195a3575ec37e8be7039684aa1e97c647b6c5b35ceb3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In practice, the program method of accounting has had very limited applications, such as in major commercial aircraft production sold to commercial (or, in some cases, commercial and government) customers. It is not often used because of all of the following: 1. a The significant uncertainties associated with making reasonably dependable estimates of the total number of units to be produced and sold 2. b The length of time to produce and sell them 3. c The associated production costs and selling prices. ##### [912-20-25-7](https://asc.understandingaccounting.org/asc/912/20/#912-20-25-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:10:21.617Z to 2026-09-10T02:10:21.617Z Record version: sha256:0ee25e2f4eba6fef58fea1c3607ac5f9c6e823d7b930f9947589ba6152d3881e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The unique aspects of the government procurement process make estimating the market and timing of deliveries extremely difficult. For example, estimating quantities and prices of future purchases by the government would be affected directly by the amount and timing of funding allocated to the program. If funding were reduced or eliminated, the effect on the program could be substantial. ##### [912-20-25-8](https://asc.understandingaccounting.org/asc/912/20/#912-20-25-8) Pending content: no Source downloaded (UTC): 2026-09-10T02:10:21.617Z to 2026-09-10T02:10:21.617Z Record version: sha256:a730f02e164e05a385d073d28e688c2544ff680a3eff310d01e8208886e27438 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In addition, the government, rather than the contractor, often retains rights to tooling and design data. This limits the potential market of the contractor and increases the risk of estimating the total market for a program by narrowing its potential customer base. Therefore, the program method of accounting is not appropriate for government contracts or subcontracts except as provided in paragraph [912-20-25-6](https://asc.understandingaccounting.org/asc/912/20/#912-20-25-6).