||Description of Implementation Issue
||Acceptable measures of progress (including uninstalled materials and wasted materials)
Acceptable measures of progress for performance obligations satisfied over time in Aerospace & Defense contracts. This implementation issue will discuss items to consider when determining which method to use when measuring progress towards completion of performance obligations satisfied over time.
||Treatment of contract costs for the various measures of progress, including pre-contract costs
How to account for contract costs. This implementation issue will discuss considerations for applying the guidance in FASB ASC 340 for incremental costs of obtaining a contract, costs to fulfill a contract, and amortization and impairment, to costs typically incurred in aerospace and defense contracts including precontract costs and learning or start-up costs.
||Constraint of revenue impact of variable pricing (incentive fees / award fees / economic price adjustments) and impact of subsequent events
Variable consideration and constraining estimates of variable consideration. This implementation issue will discuss considerations for estimating the amount of variable consideration (incentive fees, award fees, economic price adjustments) in aerospace and defense contracts, the impact of subsequent modifications, and how to determine the amount of estimated variable consideration to include in the transaction price.
||Contract existence on non USG contracts with contingencies (e.g., Congressional notification, export license)
||Transfer of control over time on non-USG contracts
Identifying the unit of account in design, development, and production contracts. This implementation issue will discuss how to determine distinct performance obligations in aerospace and defense contracts that design, develop, produce, or deliver equipment such as military vehicles or specialized aircraft engines.
||Accounting for services contracts (including series of distinct POs and impact of modifications and variable fees)
||Contract modifications, unpriced change order, claims
Accounting for contract modifications, unpriced change orders, and claims. This implementation issue will discuss the following considerations related to contract modifications on aerospace and defense contracts:
- evaluating whether a modification to a contract exists,
- how to determine whether a modification to a contract should be treated as a separate contract or part of the existing contract,
- If a modification is treated as part of the existing contract, how does an entity determine whether the modification should be treated prospectively or through a cumulative catch-up adjustment?
||Options, including loss options and loss contract guidance
||Accounting for warranty costs
||Significant Financing Component
Significant financing component. This implementation issue will discuss considerations needed to assess whether a significant financing component exists in determining the transaction price for various types of aerospace and defense contracts.
||Accounting for offset obligations
||Gross v. net considerations
||Customer furnished equipment/materials
||General allocation issues, similar to current GAAP
||Accounting for Performance-Based Logistics contracts