S.E.C. investigating Boeings accounting methods

Bloomberg news reports that the US Securities and Exchange Commission is investigating Boeing’s programme accounting methods on the 787 and 747-8.

Boeing uses a standard programme accounting method to book revenues and costs on major commercial aircraft development programmes. The 787 programme has an accounting block spread over a production run of 1,300 aircraft. Boeing estimates costs and revenues over the entire block, and assigns an average operating margin for each aircraft that rolls out the factory.

Apparently, however,the 787 programme has not followed the usual pattern of Boeing’s historic development programmes.

Boeing expects actual 787 production costs to break-even on a unit basis later this year, meaning the sale price roughly matches the amount it takes to build each aircraft.