Aerospace and Defense Revenue Recognition Task Force 


    AICPA Revenue Recognition Task Forces are charged with developing revenue recognition implementation issues that will provide helpful hints and illustrative examples for how to apply the new Revenue Recognition Standard.

    Task Force Members:

    • Michael Wood, Raytheon (Chair)
    • Tim Bremer, Deloitte LLP
    • Michael Cleary, Boeing/General Dynamics
    • Marie Fallon, United Technologies Corporation
    • Russell Hodge, GE
    • Dan Mahoney, Northrup Grumman
    • Marc Mascola, GE Aerospace
    • Mike Miller, L-3 Communications
    • Michael Peduzzi, KPMG LLP
    • Ron Rauch, Clark Nuber P.S.
    • James Reynolds, Lockheed Martin
    • Alison Spivey, Ernst & Young LLP
    • Scott Thompson, PricewaterhouseCoopers LLP
    Staff Contact: Kim Kushmerick, kkushmerick@aicpa.org

    IDENTIFIED REVENUE RECOGNITION IMPLEMENTATION ISSUES

    Below is a list of potential revenue recognition implementation issues identified by the Aerospace and Defense Revenue Recognition Task Force. The list will be updated as the task force continues its discussions. Full revenue recognition implementation issues will be posted below for informal comments after review by the AICPA Financial Reporting Executive Committee (FinREC).

    Issue # Description of Implementation Issue
    1 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.
    2 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.
    3 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.
    4 Contract existence on non USG contracts with contingencies (e.g., Congressional notification, export license)
    5 Transfer of control over time on non-USG contracts
    6 Separation/ segmentation
    7 Accounting for services contracts (including series of distinct POs and impact of modifications and variable fees)
    8 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?
    9 Options, including loss options and loss contract guidance
    10 Accounting for warranty costs
    11 Disclosures
    12 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.
    13 Transition issues
    14 Accounting for offset obligations
    15 Gross v. net considerations
    16 Customer furnished equipment/materials
    17 General allocation issues, similar to current GAAP
    18 Combing contracts
    19 Accounting for Performance-Based Logistics contracts

    FEEDBACK REQUESTED

    Draft Revenue Recognition Implementation Issues included for informal comment, when available, will be listed below.

    Respondents should submit any comments including the implementation issue number to revreccomments@aicpa.org by the dates noted below:

    Issue # Comment Due Date


    The Aerospace and Defense Revenue Recognition Task Force recommends the following AICPA products for current revenue recognition issues:



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