[Federal Register Volume 63, Number 35 (Monday, February 23, 1998)]
[Rules and Regulations]
[Pages 9067-9068]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-4305]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION


NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Part 31

[FAC 97-04; FAR Case 96-006; Item XIV]
RIN 9000-AH56

Federal Acquisition Regulation; Transfer of Assets Following a 
Business Combination

AGENCIES: Department of Defense (DoD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Final rule.

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SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council have agreed on a final rule amending 
the Federal Acquisition Regulation (FAR) to implement a final rule of 
the Cost Accounting Standards (CAS) Board regarding the treatment of 
gains and losses attributable to tangible capital assets subsequent to 
business mergers or combinations. This regulatory action was not 
subject to Office of Management and Budget review under Executive Order 
12866, dated September 30, 1993, and is not a major rule under 5 U.S.C. 
804.

EFFECTIVE DATE: April 24, 1998.

FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, GS 
Building, Washington, DC 20405 (202) 501-4755 for information 
pertaining to status or publication schedules. For clarification of 
content, contact Mr. Jeremy Olson at (202) 501-3221. Please cite FAC 
97-04, FAR case 96-006.

SUPPLEMENTARY INFORMATION:

A. Background

    A proposed rule was published in the Federal Register on July 2, 
1997 (62 FR 35890). The rule proposed amendments to the FAR to 
implement a final rule published by the CAS Board on February 13, 1996 
(61 FR 5520), that amended CAS 9904.404, Capitalization of Tangible 
Assets, and CAS 9904.409, Depreciation of Tangible Capital Assets. The 
final FAR rule differs from the proposed rule by revising FAR 31.205-
52(a) to clarify that CAS 9904.404 measures the capitalized asset 
values that are used to compute depreciation expense and cost of money, 
and FAR 31.205-52(b) to delete the term ``depreciation,'' since 
intangible capital assets do not generate depreciation expense.
    Public comments were received from three sources. All comments were 
considered in developing the final rule.

B. Regulatory Flexibility Act

    The Department of Defense, the General Services Administration, and 
the National Aeronautics and Space Administration certify that this 
final rule will not have a significant economic impact on a substantial 
number of small entities within the meaning of the Regulatory 
Flexibility Act, 5 U.S.C. 601, et seq., because most contracts awarded 
to small entities use simplified acquisition procedures or are awarded 
on a competitive, fixed-price basis, and do not require application of 
the cost principle contained in this rule.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the changes to 
the FAR do not impose recordkeeping or information collection 
requirements, or collections of information from offerors, contractors, 
or members of the public which require the approval of the Office of 
Management and Budget under 44 U.S.C. 3501, et seq.

List of Subjects in 48 CFR Part 31

    Government procurement.

    Dated: February 13, 1998.
Edward C. Loeb,
Director, Federal Acquisition Policy Division.

    Therefore, 48 CFR Part 31 is amended as set forth below:

PART 31--CONTRACT COST PRINCIPLES AND PROCEDURES

    1. The authority citation for 48 CFR Part 31 continues to read as 
follows:

    Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).

    2. Section 31.205-10 is amended by revising paragraph (a)(5) to 
read as follows:


31.205-10  Cost of money.

    (a) * * *
    (5) The requirements of 31.205-52 shall be observed in determining 
the allowable cost of money attributable to including asset valuations 
resulting from business combinations in the facilities capital employed 
base.
* * * * *
    3. Section 31.205-52 is revised to read as follows:

[[Page 9068]]

31.205-52  Asset valuations resulting from business combinations.

    (a) For tangible capital assets, when the purchase method of 
accounting for a business combination is used, whether or not the 
contract or subcontract is subject to CAS, the allowable depreciation 
and cost of money shall be based on the capitalized asset values 
measured and assigned in accordance with 48 CFR 9904.404-50(d), if 
allocable, reasonable, and not otherwise unallowable.
    (b) For intangible capital assets, when the purchase method of 
accounting for a business combination is used, allowable amortization 
and cost of money shall be limited to the total of the amounts that 
would have been allowed had the combination not taken place.

[FR Doc. 98-4305 Filed 2-20-98; 8:45 am]
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