[Federal Register Volume 91, Number 129 (Wednesday, July 8, 2026)]
[Rules and Regulations]
[Pages 42139-42143]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2026-13764]
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OFFICE OF MANAGEMENT AND BUDGET
Office of Federal Procurement Policy
48 CFR Parts 9903 and 9904
RIN 0348-AB90
Conformance of Cost Accounting Standards to Generally Accepted
Accounting Principles for Cost Accounting Standards 404, 408, 409, and
411
AGENCY: Cost Accounting Standards Board, Office of Management and
Budget.
ACTION: Final rule.
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SUMMARY: The Office of Management and Budget (OMB), Cost Accounting
Standards Board (the Board), is publishing a final rule wholly
rescinding Cost Accounting Standards (CAS) 408 and 411 and rescinding
most provisions of CAS 404 and 409 to conform to Generally Accepted
Accounting Principles (GAAP). The remaining content from CAS 404 and
409 is transferred to a different location within the Code of Federal
Regulations. This final rule follows issuance of a Notice of Proposed
Rulemaking (NPRM).
DATES: Effective date: August 7, 2026.
FOR FURTHER INFORMATION CONTACT: John L. McClung, Manager, Cost
Accounting Standards Board (telephone: 202-881-9758; email:
[email protected]).
SUPPLEMENTARY INFORMATION:
I. Background
On September 11, 2025, the Board published an NPRM (90 FR 43994) to
solicit views on the Board's provisional conclusions regarding
conformance of CAS 404, 408, 409, and 411 to GAAP. The NPRM noted that
the vast majority of CAS 404 and CAS 409 could be rescinded and that
CAS 408 and CAS 411 could be rescinded in their entirety.
The Board has determined that despite the difference in general
focus between CAS and GAAP, there has been significant convergence over
the years as GAAP has evolved to address cost measurement and
assignment of costs to accounting periods. GAAP now contains codified
content in these areas very similar to the requirements contained in
CAS 404, 408, 409, and 411. In addition, the creation of the Financial
Accounting Standards Board (FASB) and the Accounting Standards
Codification (ASC) as the recognized financial accounting and reporting
standards for GAAP fosters increased uniformity and consistency. The
FASB is recognized today by the U.S. Securities and Exchange Commission
as the designated accounting standard-setter for public companies. FASB
standards are also recognized as authoritative by many other
organizations, including State Boards of Accountancy and the American
Institute of Certified Public Accountants (AICPA). The Board has
concluded that these developments have created opportunities to amend
or rescind overlapping CAS requirements--many of which have remained
unchanged for over 50 years--where GAAP standards under ASC may be
applied reasonably as a substitute for CAS to support contract cost and
pricing.
The Board has concluded that the content of CAS 408 and 411, as
well as most of the content of CAS 404 and 409, has become unnecessary
because the Government interests addressed by that content are
adequately protected through reliance on GAAP, existing requirements in
other CAS standards, and the Federal Acquisition Regulation (FAR). Due
to the minimal amount of content from CAS 404 and 409 identified for
retention, the Board has concluded that moving the retained
requirements to another standard rather than maintaining two standards
with little content would best achieve the goal of streamlining CAS.
This final rule reflects input from the public, as well as research
conducted by the Board. This action complies with applicable
requirements of 41 U.S.C. 1502 and furthers the Board's performance of
its duties under 41 U.S.C. 1501(c), which requires, among other things,
that the Board: (1) ensure that the cost accounting standards used by
Federal contractors rely, to the maximum extent practicable, on
commercial standards and accounting practices and systems; and (2)
conform CAS, where practicable, to GAAP.
II. CAS 404--Capitalization of Tangible Assets
A. Overview and Conclusion
CAS 404 was initially published February 27, 1973, at 38 FR 5318.
It 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 also established criteria
for required policies and procedures. CAS 404 was modified in 1996 when
CAS 404-50(d) was added to address the treatment of gains or losses
attributable to tangible capital assets subsequent to mergers or
business combinations by Federal contractors, along with other
relatively modest changes. With the exception of the 1996 additions,
CAS 404 has remained static for over 50 years.
As noted in the NPRM, comparison of CAS 404 requirements with
pertinent GAAP content revealed significant overlap and equivalent
requirements with the noted exception of CAS 404-50(d)(1), which
protects the Government from paying duplicative costs when Federal
contractors merge or are acquired. Absent the requirements of CAS 404-
50(d)(1), the Government would be at risk if an asset increased in
value such that the combined depreciation recognized by both the
acquired company and the acquiring company for government contracts
exceeded the original cost of the asset. For all other requirements in
CAS 404, a comparable requirement exists in GAAP that would promote
uniformity and consistency in the measurement and assignment of the
capitalized cost of tangible assets to cost accounting periods. In
addition, the requirements contained in CAS 401 and 402 (CAS
consistency standards) and CAS 403, 410, and 418 (CAS allocation
standards) apply to all contractors subject to CAS 404 and protect the
Government's interests.
The Board has therefore concluded that, in the absence of CAS 404,
the Government's interests will be adequately protected by relying on
other CAS standards and on disclosed GAAP practices that are
consistently followed and subject to notice of changes and cost
recovery. All contractors, whether subject to full or modified CAS
coverage, are subject to CAS 401 and CAS 402 and will continue to be
required to consistently follow their disclosed or actual cost
accounting practices. Contractors will also continue to be bound by the
9903.201-4 CAS contract clauses, which require disclosure and
consistency in cost accounting practices, regardless of
[[Page 42140]]
whether a specific standard exists. These contract clauses implement
the disclosure requirements of 41 U.S.C. 1502(f)(1) and provide for the
contractor, not the Government, to bear cost increases that result from
changes to the contractor's cost accounting practices, as required by
41 U.S.C. 1502(f)(2). Furthermore, contractors currently subject to CAS
404 are those subject to full coverage and will continue to be subject
to the CAS allocation standards. CAS allocation standards address areas
required to adequately protect the Government's interest that are not
covered by GAAP, such as allocation of indirect costs to contracts.
In summary, the Board has 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,
the CAS consistency standards, and the CAS allocation standards.
Therefore, the Board is rescinding CAS 404 while retaining the
requirements from CAS 404-50(d)(1) by relocating them to a new
paragraph 9904.405-40(g). The new paragraph will also include the
retained requirements from CAS 409 discussed in Section IV below.
This action is consistent with the Board's statutory duties and
guiding principles for conforming CAS to GAAP because it rescinds CAS
content to minimize the burden on contractors, while protecting the
interests of the Government. Furthermore, rescinding CAS 404 aligns
with the guiding principle to rely on coverage in GAAP when it would
promote uniformity and consistency in cost accounting without bias or
prejudice to the Government or contractors.
As noted in the NPRM, the Board did not identify any instance where
the recission of CAS 404 would result in a change to a contractor's
disclosed cost accounting practices for government contracts. With the
noted exception of CAS 404-50(d)(1), which is being retained, the
current CAS 404 requirements are nearly identical to GAAP. The Board
expects that contractors would continue to follow their existing
practices as they would continue to be compliant with both CAS and
GAAP. Because the rescission of most of CAS 404 should not require a
change in contractor cost accounting practices, the Board does not
expect that the promulgation of this rule would justify treating a
change a contractor makes related to capitalization of the acquisition
costs of tangible assets as a ``required change'' within the meaning of
CAS 9903.201-6(a). As discussed further in the discussions of public
comments, respondents did not identify any instances in which such
treatment would be appropriate.
B. Summary of Public Comments CAS 404
The Board received four sets of public comments regarding the NPRM:
two from industry associations and two from individuals. Comments
generally agreed with the Board's provisional conclusions in the NPRM.
Specific comments and discussion are detailed below.
Comment: One commenter believes the Board has not gone far enough
to conform to GAAP because it proposed to retain CAS 404-50(d)(1). In
contrast, another commenter viewed the Board's proposed rescission of
any CAS standard as going too far. The commenter does not believe
rescission of any standard is necessary for conformance to GAAP.
Response: In carrying out the duties required by 41 U.S.C. 1501(c), the
Board has considered the factors in 41 U.S.C. 1502(c)(2) and concluded
that rescinding CAS 404 and retaining only the content from 404-
50(d)(1) will result in improvements in the pricing and administration
of contracts subject to CAS. This final rule is consistent with the
Board's statutory duties and guiding principles for conforming CAS to
GAAP because it rescinds CAS content to minimize the burden on
contractors while protecting the interests of the Government.
Comment: One commenter suggested the Board duplicate language from
the retained requirements of CAS 404-50(d)(1) in CAS 405 to avoid
unintentionally penalizing contractors by disallowing part of their
legitimate indirect costs. The commenter expressed concern that, if the
content of CAS 404 were rescinded or relocated as proposed, a
contractor might be required to include increased depreciation costs
resulting from a step-up in the value of a tangible asset due to a
merger or acquisition in the base for allocating indirect costs, even
though CAS 404-50(d)(1) calls for a no step-up, no step-down approach.
That would decrease the percentage of otherwise allowable indirect
costs that could be recovered through the contract. Response: The Board
has reconsidered the proposed location of CAS 406 for the retained
content, and the final rule locates the retained content in CAS 405.
The Board has concluded that CAS 404 more closely aligns with CAS 405
and will also avoid confusion and the unintended consequence and
concern raised by this comment.
Comment: One commenter believes the Board should exempt all
accounting changes related to ``CAS-GAAP harmonization'' from the cost
and price adjustment requirements of CAS part 9903.
Response: The Board has previously communicated to the public that
it will evaluate each CAS-to-GAAP conformance action individually. In
the case of CAS 404, no exemption from the adjustment requirements is
warranted. As the Board has already explained, there is no reason to
assume that a change in contractor accounting practices following the
effective date of this final rule will be a necessary result of the
changes to CAS 404.
III. CAS 408--Accounting for Costs of Compensated Personal Absence
A. Overview and Conclusion
CAS 408 was initially published September 19, 1974, at 39 FR 33681.
The stated purpose of the standard was to improve, and provide
uniformity in, the measurement of costs of vacation, sick leave,
holiday, and other compensated personal absence for a cost accounting
period, and thereby increase the probability that the measured costs
are allocated to the proper cost objectives. CAS 408 has remained
static for over 50 years.
As noted in the NPRM, comparison of CAS 408 with pertinent GAAP
content revealed significant overlap and nearly completely equivalent
requirements. For each requirement in CAS 408, a comparable requirement
exists in GAAP that promotes uniformity and consistency in the
measurement and assignment of costs of compensated personal absences to
cost accounting periods. The Board identified only one significant
difference between CAS and GAAP in this area. GAAP requires accruing
both accumulated and vested rights, but CAS only requires accruing
vested rights. The Board concluded that this difference is immaterial
and that using GAAP still provides sufficient uniformity and
consistency. Furthermore, as discussed in Section II above, the CAS
consistency and allocation standards, in conjunction with 9903.201-4
CAS contract clauses, adequately protect the Government's interests by
protecting the Government from payment of increased costs as a result
of changes to a contractor's accounting practices.
In summary, the Board has concluded that CAS 408 has become
unnecessary to protect the Government's interests, which may be
achieved through reliance on GAAP, and the CAS consistency and
[[Page 42141]]
allocation standards. Therefore, the Board is rescinding CAS 408.
This action is consistent with the Board's statutory duties and
guiding principles for conforming CAS to GAAP because it rescinds CAS
content to minimize the burden on contractors while protecting the
interests of the Government. Furthermore, rescinding CAS 408 aligns
with the guiding principle to rely on coverage in GAAP when doing so
would promote uniformity and consistency in cost accounting without
bias or prejudice to either the Government or contractors.
The Board has concluded that rescission of CAS 408 could in some
cases result in changes in accounting practices, as GAAP allows the
assignment of certain costs to earlier cost accounting periods than CAS
408 currently permits. Because GAAP requires estimates and adjustments
for forfeitures, the Board has concluded these differences would only
result in immaterial timing differences. As such, to streamline
administration of the transition and eliminate unnecessary burden, the
Board is exempting these changes from the required cost impact process
by adding subsection (b) to section 9903.201-9.
B. Summary of Public Comments for CAS 408
The comments discussed in Section II did not identify any
additional issues specific to CAS 408 beyond those already addressed.
IV. CAS 409--Depreciation of Tangible Capital Assets
A. Overview and Conclusion
CAS 409 was initially published January 29, 1975, at 40 FR 4259.
The purpose of CAS 409 is to provide criteria and guidance for
assigning costs of tangible capital assets to cost accounting periods
and for allocating such costs in cost objectives within such periods in
an objective and consistent manner. CAS 409 is based on the concept
that depreciation costs identified with cost accounting periods and
benefiting cost objectives within periods should be a reasonable
measure of the expiration of service potential of the tangible assets
subject to depreciation. The original preamble to the 1975 rulemaking
also noted that depreciation cost was a significant issue at the time,
and explained that many contractors primarily relied on the Internal
Revenue Code (IRC) to measure depreciation costs. The IRC contained
accelerated depreciation methods for tax purposes, and the Board viewed
this as inequitable and improper cost accounting because the methods
did not distribute the depreciation expense over the useful life of the
asset. GAAP now prohibits using the accelerated depreciation methods in
the IRC for financial reporting purposes if the amounts do not fall
within a reasonable range of the asset's useful life. Thus, one of the
principal concerns for the promulgation of CAS 409 no longer exists. In
addition, GAAP has added significant content since the initial
promulgation of CAS 409, while CAS for the most part has not changed
over the last 50 years.
As noted in the NPRM, the comparison of CAS 409 with pertinent GAAP
content revealed significant overlap and nearly completely equivalent
requirements with the noted exceptions of CAS 409-50(e)(5), CAS 409-
50(j)(1), and CAS 409-50(j)(4). For all other requirements in CAS 409,
a comparable requirement exists in GAAP to enhance uniformity and
consistency in the measurement and assignment of depreciation costs to
cost accounting periods. The Board has concluded that reliance on GAAP
would promote uniformity and consistency in cost accounting.
Furthermore, as discussed in Section II above, the CAS consistency and
allocation standards in conjunction with 9903.201-4 CAS contract
clauses adequately protect the Government's interests by protecting the
Government from payment of increased costs as a result of changes to a
contractor's accounting practices.
In summary, the Board has concluded that the provisions of CAS 409,
with the exception of CAS 409-50(e)(5), CAS 409-50(j)(1), and CAS 409-
50(j)(4), have become unnecessary to protect the Government's
interests. CAS 409-50(e)(5) provides valuable flexibility by allowing
the contracting parties to agree on the estimated service life of
individual tangible capital assets where the unique purpose for which
the equipment was acquired or other special circumstances warrant a
shorter estimated service life than the one that would result from the
application of other approaches. CAS 409-50(j)(1) ensures that gains
and losses resulting from the disposition of tangible capital assets
are properly measured and assigned consistent with the costs of the
associated depreciation charged. CAS 409-50(j)(4) protects the
Government against shifting of gains and losses associated with the
disposition of tangible capital assets transferred in other than an
arms-length transaction that are subsequently disposed of within 12
months. Therefore, the Board is rescinding most provisions of CAS 409,
but retaining the requirements of CAS 409-50(e)(5), CAS 409-50(j)(1),
and CAS 409-50(j)(4) and relocating them to a new paragraph, 9904.405-
40(g). The new paragraph 9904.405-40(g) will also include the retained
requirement from CAS 404 discussed in Section II above.
This action is consistent with the Board's statutory duties and
guiding principles for conforming CAS to GAAP because it rescinds CAS
content to minimize the burden on contractors while protecting the
interests of the Government. Furthermore, rescinding most provisions of
CAS 409 aligns with the guiding principle to rely on coverage in GAAP
when doing so would promote uniformity and consistency in cost
accounting without bias or prejudice to either the Government or
contractors. As noted in the NPRM, the Board did not identify any
instance where the rescission of CAS 409 would require a change to a
contractor's disclosed cost accounting practices for government
contracts. With the noted exceptions of CAS 409-50(e)(5), CAS 409-
50(j)(1), and CAS 409-50(j)(4), which are being retained, the current
CAS requirements are nearly identical to GAAP. The Board expects that
contractors would continue to follow their existing practices as they
are compliant with both CAS and GAAP. As such, the Board does not
expect that the promulgation of this final rule would justify treating
a change a contractor makes related to depreciation costs as a
``required change'' within the meaning of 9903.201-6(b)(2). Public
comments did not identify any instances in which such treatment would
be appropriate.
B. Summary of Public Comments for CAS 409
The comments discussed in Section II did not identify any
additional issues specific to CAS 409 beyond those already addressed.
The Board previously communicated to the public that it will evaluate
each CAS to GAAP conformance action individually. In the case of CAS
409, no exemption from the price and cost adjustment requirements of
CAS part 9903 is warranted. As the Board has already explained, there
is no reason to assume that a change in contractor accounting practices
following the effective date of this final rule will be a necessary
result of the changes to CAS 409.
V. CAS 411--Accounting for Acquisition Costs of Materials
A. Overview and Conclusion
CAS 411 was initially published on May 5, 1975, at 40 FR 19425. The
purpose of CAS 411 is to provide criteria for the accounting for
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acquisition costs of material and address the use of inventory costing
methods. The majority of the CAS 411 standard has remained static since
its initial promulgation. The standard was corrected in 1992 (57 FR
34167) to make clear that it does not cover accounting for the
acquisition costs of tangible capital assets or accountability for
government-furnished materials.
As noted in the NPRM, GAAP has been revised significantly with
additional content and changes in requirements since the original
promulgation of CAS 411, resulting in a significant overlap and nearly
completely equivalent requirements between GAAP and CAS. For each
requirement in CAS 411, a comparable requirement exists in GAAP, other
CAS standards, or FAR 31.205-26, Material Costs, that would protect the
Government's interests. The Board has concluded that rescission of CAS
411 would promote uniformity and consistency. Furthermore, as discussed
in Section II above, CAS 401 and the 9903.201-4 CAS contract clauses
adequately protect the Government's interests by protecting the
Government from payment of increased costs as a result of changes to
contractor's accounting practices.
This action is consistent with the Board's statutory duties and
guiding principles for conforming CAS to GAAP because it rescinds CAS
content to minimize the burden on contractors while protecting the
interests of the Government. Furthermore, rescinding CAS 411 aligns
with the guiding principle to rely on coverage in GAAP when doing so
would promote uniformity and consistency in cost accounting without
bias or prejudice to either the Government or contractors. As noted in
the NPRM, the Board did not identify any instance where the recission
of CAS 411 would result in a change to a contractor's disclosed cost
accounting practices for government contracts. The current CAS
requirements are nearly identical to GAAP. The Board expects that
contractors would continue to follow their existing practices as they
are compliant with both CAS and GAAP. As such, the Board does not
expect that the rescission of CAS 411 would justify treating an
accounting change a contractor subsequently makes as a ``required
change'' within the meaning of 9903.201-6(b)(2). Public comments did
not identify any instances in which such treatment would be
appropriate.
B. Summary of Public Comments for CAS 411
The comments discussed in Section II did not identify any
additional issues specific to CAS 411 beyond those already addressed.
In addition, as noted, comments did not identify any instance where the
recission of CAS 411 would result in a change to a contractor's
disclosed cost accounting practices for government contracts. The Board
previously communicated to the public that it will evaluate each CAS to
GAAP conformance action individually. In the case of CAS 411, no
exemption from the price and cost adjustment requirements of CAS part
9903 is warranted. As the Board has already explained, there is no
reason to assume that a change in contractor accounting practices
following the effective date of this final rule will be a necessary
result of the rescission of CAS 411.
VI. Expected Impact of the Rule
This final rule is deregulatory in furtherance of 41 U.S.C.
1501(c), which requires the Board to ensure that the Cost Accounting
Standards used by contractors rely, to the maximum extent practicable,
on commercial standards and accounting practices and systems. In
addition, 41 U.S.C. 1501(c) requires the Board to conform CAS
requirements, where practicable, to GAAP. This rule rescinds four of
the current 19 CAS in whole or in part, retaining and relocating only
the minimum content the Board has identified as needed to protect the
Government's interest. This results in the elimination of 68 of the 72
combined individual requirements contained in these four standards, and
the removal of over 10,000 words of unnecessary regulatory text.
Reliance on a contractor's disclosed GAAP practices for CAS purposes
significantly reduces the regulatory footprint associated with CAS and
places reliance on commercial accounting practices under GAAP
consistent with 41 U.S.C. 1501(c). These changes will reduce burden for
contractors, external auditors, government auditors, and oversight
functions by reducing duplicative compliance requirements.
These changes individually and in conjunction with the Board's
ongoing broader CAS-to-GAAP conformance efforts and modernization of
the CAS programmatic requirements are expected to simplify CAS
administration and reduce barriers to entry for non-traditional
contractors, including new mid-size entities who no longer qualify as
small businesses. These actions should increase competition in federal
contracting, as envisioned by the Senate Armed Services Committee in
promoting CAS-to-GAAP conformance (S. Rept. 114-25, Section 811): ``The
committee is concerned that the current cost accounting standards favor
incumbent defense contractors and limit competition by serving as a
barrier to participation by non-traditional, small business, and
commercial contractors. To level the competitive playing field to
access new sources of innovation it is in the government's interest to
adopt more commercial ways of contracting, accounting, and oversight.''
VII. Regulatory Flexibility Act
CAS Board rules do not impact small entities within the meaning of
the Regulatory Flexibility Act, 5 U.S.C. 601-612. Contracts and
subcontracts with small business concerns are exempted from all CAS
requirements.
VIII. Executive Orders 12866, 13563, and 14192
Executive Orders (E.O.s) 12866 and 13563 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. E.O. 13563 emphasizes the importance of quantifying both
costs and benefits, of reducing costs, of harmonizing rules, and of
promoting flexibility. This is not significant regulatory action under
E.O. 12866, Regulatory Planning and Review, dated September 30, 1993.
This rule is a deregulatory action under E.O. 14192 based on the
discussion in Section VI above.
IX. Paperwork Reduction Act
The Paperwork Reduction Act, Public Law 96-511, does not apply to
this final rule because this rule imposes no paperwork burden on
offerors, affected contractors and subcontractors, or members of the
public that would require the approval of OMB under 44 U.S.C. 3501, et
seq.
List of Subjects in 48 CFR 9903 and 9904
Government procurement, Cost accounting standards.
Kevin R. Rhodes,
Administrator, Office of Federal Procurement Policy, and Chair, Cost
Accounting Standards Board.
For the reasons set forth in the preamble, the Office of Federal
Procurement Policy is amending chapter 99 of title 48 of the Code of
Federal Regulations as set forth below:
[[Page 42143]]
PART 9903--CONTRACT COVERAGE
0
1. The authority citation for part 9903 continues to read as follows:
Authority: Public Law 111-350, 124 Stat. 3677, 41 U.S.C. 1502.
0
2. In Sec. 9903.201-9, add paragraph (b) to read as follows:
Sec. 9903.201-9 Treatment of certain compliant cost accounting
practice changes related to conformance of CAS to GAAP.
* * * * *
(b) Conformance of CAS 408 to GAAP. The contract price and cost
adjustment requirements of part 9903 are not applicable to changes
directly associated with the conformance of CAS 408 to GAAP. Changes
must be disclosed and made during the contractor's fiscal year directly
following the effective date of the final rule rescinding CAS 408.
PART 9904--COST ACCOUNTING STANDARDS
0
3. 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
4. Remove and reserve subpart 9904.404 consisting of Sec. Sec.
9904.404-20 through 9904.404-63.
0
5. In Sec. 9904.405-40, add paragraph (g) to read as follows:
Sec. 9904.405-40 Fundamental requirement.
* * * * *
(g) Recission of CAS 404 and 409 as a result of CAS-to-GAAP
conformance by the Board resulted in the following retained content
related to asset accounting and depreciation: (1) When gains and losses
are recognized on disposition of tangible capital assets, the gains or
losses shall be considered as adjustments of depreciation costs
previously recognized and shall be assigned to the cost accounting
period in which disposition occurs. The gain to be recognized for
contract costing purposes shall be limited to the difference between
the original acquisition cost of the asset and its undepreciated
balance.
(2) Gains and losses on disposition of tangible capital assets
transferred in other than arm's-length transaction and subsequently
disposed of within 12 months from the date of transfer shall be
assigned to the transferor.
(3) 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 asset(s) as reported by the seller at the
time of the transaction.
(4) The contracting parties may agree on the estimated service life
of individual tangible capital assets where the unique purpose for
which the equipment was acquired or other special circumstances warrant
a shorter estimated service life and where the shorter life can be
reasonably predicted.
Subpart 9904.408 [Removed and Reserved]
0
6. Remove and reserve subpart 9904.408 consisting of Sec. Sec.
9904.408-20 through 9904.408-63.
Subpart 9904.409 [Removed and Reserved]
0
7. Remove and reserve subpart 9904.409 consisting of Sec. Sec.
9904.409-20 through 9904.409-63.
Subpart 9904.411 [Removed and Reserved]
0
8. Remove and reserve subpart 9904.411 consisting of Sec. Sec.
9904.411-20 through 9904.411-63.
[FR Doc. 2026-13764 Filed 7-7-26; 8:45 am]
BILLING CODE 3110-01-P