Deferred IR&D Costs - CAS Board and Admiral Rickover
Admiral Rickover letters to Elmer B. Staats - Chairman Cost Accounting Standards Board
3 August 1979
...I also agree with the Board that IR&D should be costed in the year incurred.
...I recognize that the Cost Accounting Standards Board has stayed away from issuing opinions on whether IR&D or other costs are allowable. Instead, the Board promulgates standards for measuring and allocation of costs.
15 November 1978
I agree with the Board that IR&D should be costed in the year incurred. If IR&D is considered a cost of doing business, it should be treated as such. This requirement that IR&D be costed in the year incurred provides a consistent basis for all contractors. If contractors are permitted to pick and choose among IR&D projects and set their own standards for when these costs are to be allocated, many will no doubt make these decisions on a basis which will result in maximum allocation to Government contracts. Further, the Financial Accounting Standards Board's Statement No. 2 dated October, 1974, made it clear that for financial accounting purposes that IR&D should be treated as an expense of the current year and not deferred.
Current FASB, FAS and International Accounting Standards (IAS)
File:Economics of Defense Policy - Adm. H. G. Rickover Part VI IR&D Treatment.pdf
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