(Revised February 23, 1999)
SUBPART 230.71--FACILITIES CAPITAL
EMPLOYED FOR FACILITIES UNDER CONSTRUCTION
(a) "Intangible capital asset" is an
asset that has no physical substance, has more than minimal value, and
is expected to be held by an enterprise for continued use or possession
beyond the current accounting period for the benefit it yields.
Pub. L. 92-41 (85 Stat 97); or
(b) "Tangible capital asset" is an asset
that has physical substance, more than minimal value, and is expected to
be held by an enterprise for continued use or possession beyond the current
accounting period for the service it yields.
(c) "Cost of money rate" is either-
(1) The interest rate determined by
the Secretary of the Treasury under
(2) The time-weighted average of the
interest rate for each cost accounting period during which the asset is
being constructed, fabricated, or developed.
(d) "Representative investment" is the
calculated amount considered invested by the contractor during the cost
accounting period to construct, fabricate, or develop the asset.
230.7101-1 Cost of money.
(a) The interest rate in 230.7100(c)(1)
is established semi-annually and is published in the Federal Register during
the fourth week of December and June.
230.7101-2 Representative investment.
(b) To calculate the time-weighted average
(1) Multiply the various rates in effect
during the months of construction by the number of months each rate was
in effect; and
(2) Divide the sum of the products by
the total number of months in which the rates were experienced.
(a) The calculation of the representative
investment requires consideration of the rate or expenditure pattern of
the costs to construct, fabricate, or develop a capital asset.
230.7102 Determining imputed cost of
(b) If a majority of the costs were
incurred toward the beginning, middle, or end of the cost accounting period,
the contractor shall either-
(c) If the costs were incurred in a fairly
uniform expenditure pattern throughout the construction, fabrication, or
development period, the contractor may-
(a) Determine the imputed cost of money
for an asset under construction, fabrication, or development by applying
a cost of money rate (see 230.7101-1) to the representative investment
amount (see 230.7101-2).
230.7103 Preaward capital employed application.
(1) When a representative investment
amount is determined for a cost accounting period in accordance with 230.7101-2(b)(1)
or 230.7101-2(c)(1), the cost of money will be the time-weighted average
(b) The imputed cost of money will be capitalized
only once in any cost accounting period, either at the end of the period
or at the end of the construction, fabrication, or development period,
whichever comes first.
(2) When a monthly representative investment
amount is used in accordance with 230.7101-2(b)(2) or 230.7101-2(c)(2),
the cost of money will be the interest rate in effect each month. (Under
this method, the cost of money is determined monthly and the total for
the cost accounting period is the sum of the monthly amounts.)
(c) When the construction of an asset
takes more than one cost accounting period, the cost of money capitalized
for the first cost accounting period will be included in determining the
representative investment amount for any future cost accounting periods.
An offset to the profit objectives
as set forth in FAR 15.404-4 is not required for CAS 417 cost of money.