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[Federal Register Volume 90, Number 11 (Friday, January 17, 2025)]
[Proposed Rules]
[Pages 5803-5808]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-00012]

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OFFICE OF MANAGEMENT AND BUDGET

Office of Federal Procurement Policy

48 CFR Part 9904

Conformance of the Cost Accounting Standards to Generally 
Accepted Accounting Principles for CAS 404 Capitalization of Tangible 
Assets and CAS 411 Accounting for Acquisition Costs of Material

AGENCY: Cost Accounting Standards Board, Office of Federal Procurement 
Policy, Office of Management and Budget.

ACTION: Advanced notice of proposed rulemaking.

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SUMMARY: The Office of Federal Procurement Policy (OFPP), Cost 
Accounting Standards Board (CAS Board or the Board), is releasing this 
advanced notice of proposed rulemaking (ANPRM) to elicit public 
comments on proposed changes to the Cost Accounting Standards (CAS) on 
conformance to Generally Accepted Accounting Principles (GAAP) related 
to CAS 404, Capitalization of Tangible Assets, and CAS 411, Accounting 
for Acquisition Costs of Material, to GAAP. This ANPRM follows issuance 
of a Staff Discussion Paper 85 FR 58399 (September 18, 2020).

DATES: Comments must be in writing and must be received by March 18, 
2025.

ADDRESSES: Submit comments to the Federal eRulemaking Portal: https://www.regulations.gov. by searching for ``CASB 2020-1''. Select the link 
``Comment Now'' that corresponds with ``CASB 2020-1''. Follow the 
instructions provided on the ``Comment Now'' screen. Please include 
your name, company name (if any), and ``CASB 2020-1'' on your attached 
document. If your comment cannot be submitted using https://www.regulations.gov, call or email the points of contact in the FOR 
FURTHER INFORMATION CONTACT section of this document for alternate 
instructions. Comments received generally will be posted without change 
to https://www.regulations.gov, including any personal and/or business 
confidential information provided. Public comments may be submitted as 
an individual, as an organization, or anonymously (see frequently asked 
questions at https://www.regulations.gov/faq). To confirm receipt of 
your comment(s), please check https://www.regulations.gov, 
approximately two-to-three days after submission to verify posting.

[[Page 5804]]

    Privacy Act Statement: The CAS Board proposes the rule to elicit 
public views pursuant to 41 U.S.C. 1502. Submission of comments is 
voluntary. The information will be used to inform sound decision-
making. Please note that all comments received in response to this 
document will generally be posted or released in their entirety, 
including any personal and business confidential information provided. 
Do not include any information you would not like to be made publicly 
available. Additionally, the OMB System of Records Notice, OMB Public 
Input System of Records, OMB/INPUT/01, 88 FR 20913 (available at 
www.federalregister.gov/documents/2023/04/07/2023-07452/privacy-act-of-1974-system-of-records), includes a list of routine uses associated 
with the collection of this information.

FOR FURTHER INFORMATION CONTACT: John L. McClung, Manager, Cost 
Accounting Standards Board (telephone: 202-881-9758; email: 
[email protected]).

SUPPLEMENTARY INFORMATION: 

I. Background

    The Office of Federal Procurement Policy (OFPP), Cost Accounting 
Standards Board (CAS Board), is releasing this Advanced Notice of 
Proposed Rulemaking (ANPRM) on the conformance of CAS 404, 
Capitalization of Tangible Assets, and CAS 411, CAS Accounting for 
Acquisition Costs of Material, to the Generally Accepted Accounting 
Principles (GAAP). In accordance with 41 U.S.C. 1502(c), the Board is 
required to consult with interested persons concerning the advantages, 
disadvantages, and improvements anticipated in the pricing and 
administration of Government contracts as a result of the adoption of a 
proposed Standard prior to the promulgation of any new or revised CAS.
    On September 18, 2020, the Board published a Staff Discussion Paper 
(85 FR 58399) to solicit views with respect to the Board's initial 
assessment of CAS 404 and CAS 411 to conform them, where practicable, 
to GAAP. Respondents were invited to comment, among other things, on 
the differences identified between CAS and GAAP, the frequency and 
magnitude of issues identified with CAS non-compliances, and 
recommendations on any changes to the Standards to conform them to 
GAAP.
    This ANPRM reflects input from the public, as discussed below, as 
well as research accomplished by the Board in the respective subject 
areas. The Board used the side-by-side comparison of CAS and GAAP 
requirements set forth in the Staff Discussion Paper to identify any 
material differences. Unique CAS requirements were assessed for their 
necessity in protecting the interests of the Government or if the 
existing requirements in other CAS standards or requirements in other 
relevant rules may protect the interests of the Government.

II. CAS 404

A. Overview

    CAS 404 requires contractors, for the purposes of cost measurement, 
to establish and adhere to policies with respect to capitalization of 
the acquisition costs of tangible assets. CAS 404 establishes criteria 
which the contractor's policies and procedures should satisfy. CAS 404 
was initially published February 27, 1973 at 38 FR 5318. The preamble 
for the original publication of CAS 404 acknowledged that:

    Work preliminary to the development of this Standard was 
initiated as the result of recognition that the general subject of 
fixed asset accounting has been the source of continuing problems 
between contractors and the Government concerning equitable 
determinations of the costs attributable to performance of specific 
contracts.

    The Board ultimately decided after careful consideration of public 
comments that this standard would establish the beginning point for 
fixed assets and focus solely on the ``determination of the acquisition 
costs to be capitalized as opposed to those which are charged against 
revenues of the current period [as depreciation]''.
    CAS 404 was modified in 1996 by the addition of CAS 404-50(d) to 
address issues relating to the treatment of gains or losses 
attributable to tangible capital assets subsequent to mergers or 
business combinations by government contractors. This added language 
requires tangible capital assets of an acquired company to be 
capitalized by the buyer at the seller's net book value, if the assets 
generated cost on government contracts in the most recent cost 
accounting period prior to the business combination; otherwise, the 
assets, which did not generate cost on government contracts, may be 
assigned a portion of the purchase price of the acquired entity not to 
exceed their fair value.
    With the exception of the requirements added in 1996 by CAS 404-
50(d)(1), the principal need for the promulgation of the initial CAS 
404 no longer exists. GAAP has been revised significantly with 
additional content since the original promulgation of CAS 404 in 1974.
    Furthermore, as explained in greater detail in the response to 
public comments in subsection b., below, a comparison of CAS 404 with 
pertinent GAAP content revealed significant overlap and nearly 
completely equivalent requirements with the noted exception of CAS 404-
50(d). For all other requirements in CAS 404, a comparable requirement 
exists in GAAP, FAR or other CAS Standard that would protect the 
Government's interests and promote uniformity and consistency. The 
alignment is so close as to make CAS 404 nearly duplicative of GAAP in 
all cases except CAS 404-50(d)(1). Where such comparable requirements 
exist between CAS and GAAP, the CAS 404 requirement can be eliminated.
    In addition to the CAS 404-50(d) requirements for assets acquired 
through a business combination, there are two other potential 
differences between CAS and GAAP that require further consideration: 
(i) the CAS requirements for a minimum capitalization threshold, and 
(ii) written statements of accounting policies and practices. As 
described below in subsection b., the Board has provisionally concluded 
that reliance on GAAP would materially achieve uniformity and 
consistency necessary for Government contracting related to these two 
differences.
    In summary, the Board has provisionally concluded that CAS 404, 
with the exception of CAS 404-50(d)(1), has become unnecessary to 
protect the Government's interests which may be achieved through 
reliance on GAAP and other CAS Standards. Therefore, the Board is 
considering a proposed rule that would eliminate CAS 404 and retain the 
requirements CAS 404-50(d)(1) by relocating them to 9904.418-50 and 
seeks comment on such action in this ANPRM. This action would be 
consistent with the Board's guiding principles for conforming CAS to 
GAAP because it would eliminate CAS content to minimize the burden on 
contractors while protecting the interests of the Federal Government. 
Furthermore, the Board's conclusion on CAS 404 would align with the 
guiding principles to rely on coverage in GAAP when it would materially 
achieve uniformity and consistency in cost accounting without bias or 
prejudice to either party, rely on other CAS Standards which may 
protect the Government's interests, and eliminate CAS coverage no 
longer necessary.

[[Page 5805]]

B. Summary of Public Comments

    The Board received four sets of public comments to the SDP. These 
comments came from industry associations and companies. The Board 
appreciates the efforts of all parties that submitted comments and 
found the depth and breadth of the comments to be informative. 
Responses to specific comments for CAS 404 are as follows:
    1. Minimum capitalization threshold. The Board observed in the SDP 
that CAS prescribes a specific ceiling for a monetary capitalization 
threshold (currently not to exceed $5,000), and GAAP does not.
    Comment: Four respondents provided comments to this potential 
difference identified by the Board. All four stated that the conceptual 
framework of GAAP would provide reasonable limitations for selecting 
capitalization thresholds and consistently following them. Two 
respondents also observed additional FAR requirements and market forces 
that would curb unreasonably high thresholds and protect the 
government's interests.
    Response: Although GAAP does not provide for a specific minimum 
capitalization threshold, the Board has provisionally determined that 
the competitive constraints, disclosure statement requirements, and 
retention of CAS 401, which requires contractors subject to CAS to 
consistently follow their disclosed practices, should adequately 
protect the governments interest in the absence of the current 
prescriptive capitalization threshold. The risk of variations in the 
capitalization threshold, given the constraints discuss further below, 
would generally only result in immaterial differences in the assignment 
of cost between cost accounting periods.
    2. Written statements of accounting policies and practices. The 
second potential difference the Board noted is the requirement to have 
a written policy for capitalization. GAAP does not explicitly require a 
written statement for capitalization policy; however, typically, 
written documentation would exist because it would be required as 
evidence of internal controls during audits of Sarbanes-Oxley 
compliance and of financial reporting.
    Comment: All respondents believed that written policies and 
procedures would exist absent the perspective requirement currently 
contained CAS. For example, in meeting the GAAP requirements, 
contractors maintain conventions and guidelines for the consistent 
treatment of the costs of acquiring tangible capital assets. Such 
conventions represent reasonable limits and are maintained to satisfy 
the GAAP requirements for consistency and accurate accounting. In 
addition, contractors subject to CAS would still have to consistently 
follow their disclosed practices (CAS 401) and the information would 
also be included in a disclosure statement.
    Response: Although GAAP does not explicitly require a written 
statement for capitalization policies, the Board agrees with the 
respondents and has provisionally determined that these written 
statements would continue to exists in the absence of the current 
explicit CAS requirement. The cumulative requirements that will remain 
in CAS 401, which requires comparison of actual practices year over 
year, Disclosure Statements and current practices to comply with GAAP 
would adequately protect the governments interest absent the expressed 
requirement to maintain policies and procedures required by CAS. In 
addition, FAR and DFARs accounting system requirements also make 
written policies and procedures, such as on capitalization, necessary.
    3. Assets acquired through a business combination. Another 
difference noted by the Board is the requirements in CAS for treatment 
of tangible assets acquired in a business combination. CAS 404-50(d) 
and (e) refer to two financial accounting treatments for business 
combinations: ``purchase method'' and ``pooling of interest method.'' 
As noted in the SDP, these methods could be found in financial 
accounting literature at APB Opinion 16. Subsequently, financial 
accounting treatment has been revised several times.
    In June 2001, FASB revised its approach for accounting for business 
combinations in Statement Financial Accounting Standards No. 141, which 
superseded APB Opinion 16 and adopted a single-method approach 
requiring that all business combinations be accounted for by the 
purchase method. The purchase method requires that the cost attributed 
to the plant and equipment of the acquired entity be ``the current 
replacement cost for similar capacity unless the expected future use of 
the assets indicates a lower value to the acquiring entity.''
    July 2009, the FASB Accounting Standards Codification (ASC) became 
authoritative for GAAP, and ASC 805-20-30-1 requires acquirers to 
measure tangible capital assets at the acquisition date fair values, 
which would be the same as replacement value at acquisition date. 
Replacement value refers to the amount a similar condition and used 
asset would cost. The CAS Board notes, however, that FASB Topic 105--
Generally Accepted Accounting Principles provides APB Opinion 16 and 
FASB Statement No. 141 are considered grandfathered guidance allowing 
for the continued application of the superseded accounting standards 
for business combination transactions that have an ongoing effect in an 
entity's financial statements. As part of the codification, GAAP has 
also transitioned to the term ``acquisition method'' rather than 
``purchase method'' for this accounting treatment of business 
combinations.
    Regarding the cost treatment of tangible assets acquired in a 
business combination accounted for under the purchase method, the Board 
noted that under CAS 404-50(d)(2) when the acquired company has 
tangible assets that did not generate depreciation or cost of money 
allocated to Federal contracts the assets are assigned a portion of the 
purchase price of the acquired company, not to exceed their fair value. 
However, under CAS 404-50(d)(1) when the acquired company has tangible 
assets that generated depreciation or cost of money allocated to 
Federal contracts, the assets are measured by the acquirer at the net 
book value. By comparison, for both circumstances, GAAP would require 
that the assets be measured by the acquirer at fair value. Absent the 
requirements of CAS 404-50(d)(1) the government would be at risk if an 
asset was increased in value such that the combined depreciation 
recognized by the both the acquired company and the acquiring company 
for government contracts exceeds the historic cost for which the asset 
was originally purchased for use.
    Comment: Three respondents provided comments to this potential 
difference identified by the Board. All three agreed if CAS 404 was 
eliminated that this provision should be retained as a procurement 
Policy in the FAR 31.205-52, as noted by the Board in the SDP. However, 
all three also urged to the Board that if CAS 404 was eliminated CAS 
405 should also be revised to avoid a potential unintended consequence 
and harm to contractors related to inclusion of unallowable costs in 
allocation bases.
    Response: The Board believes this difference between CAS and GAAP 
may create an exposure of unknown materiality. The Board agrees with 
the commenters' observation that risk could be mitigated by a 
procurement policy through modification of the FAR. However, the Board 
has provisionally concluded that the underlying issue relates to the 
measurement of costs and

[[Page 5806]]

therefore should be addressed by the Board. For these reasons, the 
Board is considering a proposed rule that would retain the requirements 
in CAS 404-50(d)(1) and move them to a new section in 9904.418-50. The 
retention would also prevent the potential unintended consequence and 
harm to contractors related to inclusion of unallowable costs in 
allocation bases raised in the comments. This proposed action would be 
consistent with the Board's guiding principles to eliminate content 
from CAS where GAAP, other CAS Standards or other relevant rules may 
protect the interests of the Government. In addition, the Board 
provisionally concluded that moving the retained requirement to another 
Standard rather than maintaining CAS 404 with minimal content would 
best achieve the goal of streamlining CAS. The Board is seeking 
comments on such actions in this ANPRM.

III. CAS 411

A. Overview

    CAS 411, initially published May 5, 1975 at 40 FR 19425, provides 
criteria for the accounting for acquisition costs of material used 
during the course of a contract. CAS 411 also includes provisions on 
the use of inventory costing methods. The preamble for the original 
publication of CAS 411 acknowledged that--

    Preliminary work on the development of this Standard resulted 
from the absence of a requirement in agency regulations that the 
same costing method be used for similar categories of material 
within the same business unit and that the method be consistently 
applied.

    The principal need for the promulgation of the initial CAS 411 no 
longer exists. GAAP has been revised significantly with additional 
content and changes in requirements since the original promulgation of 
CAS 411 in 1975. The majority of the CAS 411 standard has remained 
static since the initial promulgation. The standard, however, was 
corrected in 1992 (57 FR 34167) to make clear that it does not cover 
accounting for the acquisition costs of tangible capital assets nor 
accountability for Government-furnished materials.
    Furthermore, as explained in greater detail in the response to 
public comments in subsection b., below, a comparison of CAS 411 with 
pertinent GAAP content revealed significant overlap and nearly 
completely equivalent requirements. The Board identified that a 
comparable requirement existed in GAAP, FAR or other CAS Standard that 
would protect the Government's interests and promote uniformity and 
consistency. The alignment is so close as to make CAS 411 nearly 
duplicative of GAAP. The Board reasoned that where such comparable 
requirements exist between CAS and GAAP, the CAS 411 requirement could 
be eliminated.
    The Board identified two potential differences between CAS and GAAP 
that required further consideration. The CAS requires written 
statements of accounting policies, and uses the terms ``moving'' and 
``weighted'' average in relation to inventory costing methods, while 
GAAP simply uses ``average''. As described below in subsection b, the 
Board has provisionally concluded that reliance on GAAP would 
materially achieve uniformity and consistency necessary for Government 
contracting related to these two differences. In addition, as it 
relates to written statements of accounting policies, contractors whose 
activities that would trigger full CAS coverage and have been subject 
to CAS 411 would still be required to disclose these practices as part 
of their required CAS Disclosure Statement.
    For the reasons stated above, the Board is considering a proposed 
rule that would eliminate CAS 411 in its entirety. This action would be 
consistent with the Board's guiding principles for conforming CAS to 
GAAP because it would eliminate CAS content to minimize the burden on 
contractors while protecting the interests of the Federal Government. 
Furthermore, the Board's provisional conclusion on CAS 411 would align 
with the guiding principles to rely on coverage in GAAP when it would 
materially achieve uniformity and consistency in cost accounting 
without bias or prejudice to either party, rely on other CAS Standards 
which may protect the Government's interests, and eliminate CAS 
coverage no longer necessary.

B. Summary of Public Comments

    The Board received four sets of public comments to the SDP. These 
comments came from industry associations and companies. The Board 
appreciates the feedback. Responses to specific comments for CAS 411 
are as follows:
    1. Written statements of accounting policies and practices. The 
Board noted that GAAP does not explicitly require written statements of 
accounting policies and practices, while CAS 411-40(a) requires written 
statements of accounting policies and practices for accumulating the 
costs of material and for allocating costs of material to cost 
objectives.
    Comment: All commenters acknowledged GAAP does not explicitly 
require a written statement of accounting policies and practices, 
however approximately 70% of the AIA member companies surveyed and 77% 
of FEI commercial companies surveyed do in fact have specific written 
policies and procedures addressing this area. Commenters noted the 
Board, during the promulgation of CAS 411, had acknowledged that many 
companies had written policies and practices in place before the CAS 
411 requirement existed. Further, companies subject to CAS 411 are also 
required to submit Disclosure Statements. They also noted that 
Enterprise Resource Planning (ERP) software systems would be another 
existing source for written statements of accounting practices related 
to how the costs of material are accumulated and allocated. ERP 
software systems are used by contractors to manage their day-to-day 
business activities related to material management and accounting for 
such activity include documented business scripts that document how the 
system works.
    Response: Although GAAP does not explicitly require a written 
statement for accounting policies and practices for accumulating the 
costs of material and for allocating costs of material to cost 
objectives, the Board has provisionally determined that these written 
statements would continue to exists in the absence of the current 
explicit CAS requirement. The cumulative requirements that will remain 
in CAS 401, Disclosure Statements and current practices to comply with 
GAAP would adequately protect the government's interest absent the 
expressed requirement to maintain policies and procedures required by 
CAS.
    2. Average cost method for inventory costing. The second difference 
noted by the Board in the SDP related to the average cost method for 
measuring inventory. CAS provides for the use of the moving average 
cost method or the weighted average cost method. Both of these methods 
are explicitly defined in CAS 411-30, including how the cost would be 
computed under each method. CAS 411-30(a)(6) defines ``moving average'' 
as ``an inventory costing method under which an average unit cost is 
computed after each acquisition by adding the cost of the newly 
acquired units to the cost of the units of inventory on hand and 
dividing this figure by the new total number of units.'' CAS 411-
40(a)(7) defines ``weighted average cost'' as ``an inventory costing 
method under which an average unit cost is computed periodically by 
dividing the sum of the

[[Page 5807]]

cost of beginning inventory plus the cost of acquisitions by the total 
number of units included in these two categories.'' By comparison, GAAP 
simply provides for the use of an ``average'' method without defining 
or describing specific average methods. GAAP does make clear in ASC 
330-10-30-9 that ``the major objective in selecting a method [for 
inventory costs] should be to choose the one which, under the 
circumstances, most clearly reflects periodic income.'' The Board 
understood this to mean that the method selected must result in a 
measurement of costs matched against revenue from a sale. The matching 
principle between cost and revenue in GAAP is similar to the CAS 
concept of matching the cost to a contract--both of which result in 
periodic income. As a result, although GAAP doesn't explicitly define 
acceptable average methods, there is some constraint to the variations 
a contractor could elect to use in compliance with GAAP.
    Comment: Commenters noted the Board is correct in that GAAP does 
not define specific ``average'' inventory costing methods, however 
their research of various GAAP pronouncements and discussions with 
member companies' GAAP accountants failed to uncover an average method 
beyond weighted average and moving average methods. Additionally, 100% 
of the AIA and FEI member companies surveyed use either the moving 
average, weighted average or standard cost method for inventory 
costing. Furthermore, in today's world, the logic behind inventory 
valuation methods is built into very expensive ERP systems and is not 
changed haphazardly. FEI noted that a survey of member companies showed 
that changes are overwhelmingly driven (i.e., 82%) by either new ERP 
system implementations/upgrades or organization type transaction 
activities (e.g., M&A). None of the respondents noted they make changes 
to ERP systems in order to solely change inventory valuation/costing 
methods. Commenters also noted that they are not aware of any 
circumstances where the use of an average method compliant with GAAP 
would not be acceptable for accounting for government contracts. AIA 
further noted it was not aware of an average costing method compliant 
with GAAP beyond the moving average or weighted average methods. In 
addition, commenters noted that the guiding principles of GAAP align 
identically with the fundamental requirements of CAS 411, so even if 
there was another inventory average costing method for GAAP, such 
method would almost certainly be acceptable for accounting for 
government contracts. GAAP's guiding principles require the use of a 
consistently applied inventory method that is rational, reasonable and 
matches inventory costs with revenues. Identical to GAAP, CAS 411 
requires that the inventory costing method chosen must be, ``used in a 
manner which results in systematic and rational costing of issues of 
material to cost objectives. The same costing method shall, within the 
same business unit, be used for similar categories of material.'' (Ref: 
9904.411-40(e)). Commenters view the principles and requirements of 
GAAP in this area are more restrictive than CAS.
    Response: The Board appreciates the efforts of the associations and 
their members to gather and provide this information and analysis. 
Based on the comments and additional research conducted by the Board, 
the Board has not identified any additional ``average'' inventory 
costing methods beyond weighted or moving. The Board has provisionally 
concluded that CAS 411 and the corresponding requirements in GAAP are 
not materially different. Furthermore, the Board has also provisionally 
concluded that GAAP, FAR and other Standards may protect the 
Government's interests. Therefore, the Board is considering a proposed 
rule that would eliminate CAS 411 and rely on GAAP to achieve the 
uniformity and consistency required for Government contracting. This 
action would be consistent with the Board's guiding principle to 
eliminate content from CAS where reliance on GAAP would materially 
achieve uniformity and consistency in cost accounting without bias or 
prejudice to either party.

IV. Paperwork Reduction Act

    The Paperwork Reduction Act, Public Law 96-511, does not apply to 
ANPRM because these actions impose no paperwork burden on offerors, 
affected contractors and subcontractors, or members of the public 
requiring the approval of OMB under 44 U.S.C. 3501, et seq.

V. Executive Orders 12866, 13563, 14094 and the Regulatory Flexibility 
Act

    Executive Orders (E.O.s) 12866, 13563, and 14094 direct agencies to 
assess all costs and benefits of available regulatory alternatives and, 
if regulation is necessary, to select regulatory approaches that 
maximize net benefits (including potential economic, environmental, 
public health and safety effects, distributive impacts, and equity). 
E.O. 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. The economic impact of the ANPRM is expected to be minor 
because the affected contractors and subcontractors are those who are 
already subject to CAS and would seek to rely more heavily on GAAP, 
which these contractors are using in their commercial transactions. 
Accordingly, the ANPRM is not a significant regulatory action and, 
therefore, are not subject to review under section 6(b) of E.O. 12866, 
Regulatory Planning and Review, as amended by E.O. 14094, Modernizing 
Regulatory Review.

List of Subjects in 48 CFR 9904

    Government procurement, Cost accounting standards

Christine J. Harada,
Senior Advisor Office of Federal Procurement Policy, and Chair, Cost 
Accounting Standards Board, performing by delegation the duties of the 
Administrator for Federal Procurement Policy.

    For the reasons set forth in the preamble, The Federal Procurement 
Policy Office proposes to amend 48 CFR part 9904 as set forth below:

PART 9904--COST ACCOUNTING STANDARDS

0
1. The authority citation for part 9904 continues to read as follows:

    Authority: Pub. L. 100-679, 102 Stat. 4056, 41 U.S.C. 422.

Subpart 9904.404--[Removed and Reserved]

0
2. Remove and reserve subpart 9904.404.

Subpart 9904.411--[Removed and Reserved]

0
3. Remove and reserve subpart 9904.411.
0
4. In Sec.  9904.418-50, add paragraph (i) to read as follows:

Sec.  9904.418-50  Techniques for application.

* * * * *
    (i) The capitalized values of tangible capital assets acquired in a 
business combination shall be assigned to these assets as follows: All 
the tangible capital assets of the acquired company that during the 
most recent cost accounting period prior to a business combination 
generated either depreciation expense or cost of money charges that 
were allocated to Federal government contracts or subcontracts 
negotiated on the basis of cost, shall be capitalized by the buyer at 
the net book value(s) of the

[[Page 5808]]

asset(s) as reported by the seller at the time of the transaction.

[FR Doc. 2025-00012 Filed 1-16-25; 8:45 am]
BILLING CODE 3110-01-P
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