The Cost of Money on Assets Under Construction and Defense Contracting.
Abstract
On May 5, 1978, the Cost Accounting Standards Board issued a proposal containing two possible alternatives for the allocation of the cost of money associated with assets under construction. Alternative A would require capitalization while Alternative B would modify a current standard to include the interest on construction. This thesis examines the nature of the commitment by a sample of government contractors to construction-in-progress and the interest cost associated with this level of investment. It then examines and evaluates the cost streams associated with each of the alternatives and a hypothetical asset under construction account. It was determined that by using present value, and at reasonable discount rates, the differences between the two alternatives could be considered immaterial. (Author)
Document Details
- Document Type
- Technical Report
- Publication Date
- Sep 01, 1979
- Accession Number
- ADA078272
Entities
People
- Glenn James Pittman
Organizations
- Naval Postgraduate School