Boeing Charges, Costs Nearly $35 Billions Since 1996
Boeing is one of few companies in the US to use program accounting. This masks current charges in the GAAP-approved financial statements
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November 6, 2019 - by Vincent Valery for leehamnews.com
Boeing already has racked up $9.2bn in one-time charges and additional costs to the accounting block in the 737 MAX crisis.
Some expect there will be more substantial charges before the dust settles. Even Boeing officials said it will be years before all customer claims are settled. Legal liabilities are only partially covered by insurance.
Program accounting, which is unique to the US, allows a company to spread the costs of an expensive development over the anticipated life of the program and the forecasted orders.
Other countries require unit accounting or charging off costs as they occur during development.
Boeing is one of few companies in the US to use program accounting. This masks current charges in the GAAP-approved financial statements. A few years ago, Boeing also began reporting non-GAAP numbers on the basis of unit costs as additional information.
With one-time charges and added costs to program accounting assumptions related to the 737 MAX grounding, Boeing's accounting policies are back in the spotlight.
The accounting policy became controversial as deferred production costs spiked on the 787 program.
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