federal government contractors

ASC 210-912 formerly provided balance sheet classification and disclosure guidance for contractors with the federal government (e.g., presentation of receivables, unbilled amounts, and advances/progress payments on government contracts). Every paragraph in the subtopic — Sections 05, 15, 45, and 50 — was superseded by ASU 2014-09 (Revenue from Contracts with Customers). The subtopic is now an empty shell with no operative guidance; contract asset and contract liability presentation for government contractors is governed by ASC 606 (and ASC 340-40 for related costs).

This industry-specific subtopic addresses how a federal government contractor presents amounts in the income statement relating to terminated contracts. After ASC 2014-09 superseded most of its guidance, the only surviving rule is that items the contractor keeps without making a claim for cost or loss stay on the balance sheet as inventory or deferred charges (220-912-45-3).

ASC 225-912 formerly provided income statement presentation guidance for contractors with the federal government (a subtopic of the legacy Income Statement topic). Every paragraph in the subtopic — Overview and Background (05), Scope (15), and Other Presentation Matters (45) — was superseded by Maintenance Update 2017-19, so the subtopic contains no operative guidance. Presentation questions for federal government contractors are now addressed under the revenue and other applicable topics rather than here.

ASC 235-912 formerly provided accounting-policy disclosure guidance in the notes to financial statements for entities contracting with the federal government. All of its content (paragraphs 235-912-05-1, 15-1 and 50-1) was superseded by ASU 2014-09, the revenue recognition standard, so the subtopic now carries no operative guidance.

ASC 605-912 was the legacy industry guidance on revenue recognition for contractors with the U.S. federal government, covering matters such as recognition of fees, contract terminations, renegotiation and price redetermination. Every paragraph in the subtopic (Sections 05, 15, 25, and 50) was superseded by ASU 2014-09, so the subtopic contains no remaining substantive guidance. Federal government contractors now apply ASC 606 (with related guidance in ASC 340-40) and, if applicable, the residual industry guidance in ASC 912.

ASC 705-912 formerly contained cost-of-sales guidance for contractors with the federal government, addressing matters such as contract costs and related recognition and disclosure. Every paragraph in the subtopic (scope, recognition, and disclosure) was superseded by ASU 2014-09 (Revenue from Contracts with Customers). The subtopic is therefore an empty shell; federal government contractors now apply ASC 606 and the cost guidance in ASC 340-40.

ASC 912-10 is the Overall subtopic of the Contractors—Federal Government Topic, which layers incremental industry guidance on top of otherwise applicable GAAP for entities doing business with the U.S. federal government. It explains that the federal customer is a sovereign that procures under statutes and regulations governing contractor selection, monitoring, and payment, creating risks not present in commercial dealings. Its scope covers all entities with federal government contracts, specifically cost-plus-fixed-fee contracts and fixed-price war and defense supply contracts terminated for the convenience of the government.

ASC 912-20 governs how contractors with the federal government account for contract costs, including the requirement to follow Federal Acquisition Regulation cost principles when costs are analyzed in the procurement process. It addresses allocation of indirect costs, recording of subcontractor/vendor claims, accounting for terminations (convenience versus default), and restricts the use of program accounting. Losses from default terminations are treated as changes in accounting estimate in the current period, not as prior-period adjustments.