(a) Changes in the interest rate levels (a) Adopting the increase
in the national economy have (decrease) in the interest
invalidated the prior actuarial rate actuarial assumption is
assumption with respect to anticipated not a change in cost
investment earnings. The pension plan accounting practice.
administrators adopted an increased
(decreased) interest rate actuarial
assumption. The company allocated the
resulting pension costs to all final
cost objectives.(b) The basic benefit amount for a (b) The increase in the amount
company's pension plan is increased of the benefits is not a
from $8 to $10 per year of credited change in cost accounting
service. The change increases the practice.
dollar amount of pension cost
allocated to all final cost objectives.(c) A contractor who has never paid (c) The initial adoption of an
pensions establishes for the first accounting practice for the
time a pension plan. Pension costs for first time incurrence of a
the first year amounted to $3.5 cost is not a change in cost
million. accounting practice.(d) A contractor maintained a Deferred (d) There was a termination of
Incentive Compensation Plan. After the Deferred Incentive
several years' experience, the plan Compensation Plan. Elimination
was determined not to be attaining its of a cost is not a change in
objective, so it was terminated, and cost accounting practice.
no future entitlements were paid.
(e) A contractor eliminates a segment (e) The projects and expenses
that was operated for the purpose of related to nuclear energy
doing research for development of projects have been terminated.
products related to nuclear energy. No transfer of these projects
and no further work in this
area is planned. This is an
elimination of cost and not a
change in cost accounting
practice.(f) For a particular class of assets (f) The change in estimate (not
for which technological changes have in method) is not a change in
rarely affected asset lives, a cost accounting practice. The
contractor starts with a 5-year contractor has not changed the
average of historical lives to method or technique used to
estimate future lives. He then determine the estimate. The
considers technological changes and methodology applied has
likely use. For the past several years indicated a change in the
the process resulted in an estimated estimated life, and this is
future life of 10 years for this class not a change in cost
of assets. This year a technological accounting practice.
change leads to a prediction of a
useful life of 7 years for the assets
acquired this year for the class of
assets.(g) The marketing department of a (g) After the organization
segment has reported directly to the change in the company's
general manager of the segment. The reporting structure, the
costs of the marketing department have parties agree that the
been combined as part of the segment's appropriate recognition of the
G&A; expense pool. The company beneficial or causal
reorganizes and requires the marketing relationship between the costs
department to report directly to a of the marketing department
vice president at corporate and the segment is to continue
headquarters. to combine these costs as part
of the segment's G&A; expense
pool. Thus, the organizational
change has not resulted in a
change in cost accounting
practice.------------------------------------------------------------------------