General Dynamics Corporation and Subsidiaries - Page 63

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          the long-term approach.  Although the parties remained subject to           
          certain features of the annual appropriation process, their long-           
          term commitments, in many respects, changed the way they did                
          business.                                                                   
               Both petitioner and respondent make valid points concerning            
          the business exigencies and customs, but ultimately the Air Force           
          and petitioner were subject to a long-term contract with                    
          interdependent pricing of all the aircraft deliverable under                
          Contract 2034.                                                              
               7.  Conclusion and Summary--Contract 2034                              
               In the final analysis, respondent asks that we focus on                
          attributes of Contract 2034 that represent only a few of the                
          criteria contained in the regulations for deciding whether a                
          long-term contract should be severed or aggregated.  Petitioner,            
          however, meets the most significant as well as the majority of              
          the regulatory criteria for its reporting the income and expenses           
          for all 4 years of Contract 2034 as a single long-term contract             
          under CCM.                                                                  
               The main thrust of respondent's argument is that                       
          petitioner’s use of CCM to report the income and expenses of                
          Contract 2034 does not clearly reflect income unless the contract           
          is severed into 4 contracts each for the manufacture and delivery           
          of 120 aircraft.  As petitioner has shown, however, Contract 2034           
          was a 4-year commitment for which pricing and resultant profit              
          were dependent on the fabrication and delivery of all 480 units.            



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