Lockheed Martin records inventories at the lower cost or the net realizable value. In the accounting report,
Question:
Lockheed Martin records inventories at the lower cost or the net realizable value. In the accounting report, the costs of a long-term contract represent the recoverable costs incurred for contract-specific facilities and equipment. They also include costs of advances to suppliers and allocable operating overhead. Since the company operates in the defense industry, the government has a specific interest in the inventory related to such contracts due to the performance-based payment. Lockheed Martin has also disclosed the net inventory, including work in process and other primary related long-term agreements. The company has also announced what is contained in the inventories. The work-in-process inventory includes $3,132 million of general and administrative costs.
Understanding Financial Accounting
ISBN: 9781119406921
2nd Canadian Edition
Authors: Christopher D. Burnley