Boeing 2009 Annual Report Download - page 72

service period of employees. The funded status of our pension and postretirement plans is reflected on
the Consolidated Statements of Financial Position. Effective December 31, 2008, accounting standards
required us to measure our plan assets and benefit obligations at December 31, the date of our year
end. We previously performed this measurement at September 30 of each year.
Postemployment Plans
We record a liability for postemployment benefits, such as severance or job training, when payment is
probable, the amount is reasonably estimable, and the obligation relates to rights that have vested or
accumulated.
Environmental Remediation
We are subject to federal and state requirements for protection of the environment, including those for
discharge of hazardous materials and remediation of contaminated sites. We routinely assess, based
on in-depth studies, expert analyses and legal reviews, our contingencies, obligations, and
commitments for remediation of contaminated sites, including assessments of ranges and probabilities
of recoveries from other responsible parties who have and have not agreed to a settlement and of
recoveries from insurance carriers. Our policy is to accrue and charge to current expense identified
exposures related to environmental remediation sites based on our best estimate within a range of
potential exposure for investigation, cleanup, and monitoring costs to be incurred. Estimated
remediation costs are not discounted to present value as the timing of payments cannot be reasonably
estimated. We may be able to recover a portion of the remediation costs from insurers or other third-
parties. Such recoveries are recorded when realization of the claim for recovery is deemed probable.
Cash and Cash Equivalents
Cash and cash equivalents consist of highly liquid instruments, such as commercial paper, certificates
of deposit, time deposits, and other money market instruments, which have original maturities of three
months or less. We aggregate our cash balances by bank, and reclassify any negative balances to
Accounts payable. Accounts payable included $211 and $157 at December 31, 2009 and 2008,
attributable to checks written but not yet cleared by the bank.
Inventories
Inventoried costs on commercial aircraft programs and long-term contracts include direct engineering,
production and tooling costs, and applicable overhead, which includes fringe benefits, production
related indirect and plant management salaries and plant services, not in excess of estimated net
realizable value. To the extent a material amount of such costs are related to an abnormal event or are
fixed costs not appropriately attributable to our programs or contracts, they are expensed in the current
period rather than inventoried. Inventoried costs include amounts relating to programs and contracts
with long-term production cycles, a portion of which is not expected to be realized within one year.
Included in inventory for federal government contracts is an allocation of allowable costs related to
manufacturing process reengineering.
Because of the higher unit production costs experienced at the beginning of a new or derivative
commercial airplane program, the actual costs incurred for production of the early units in the program
may exceed the amount reported as cost of sales for those units. In addition, the use of a total program
gross profit rate to delivered units may result in costs assigned to delivered units in a reporting period
being less than the actual cost of those units. The excess actual costs incurred over the amount
reported as cost of sales is disclosed as deferred production costs, which are included in inventory
along with unamortized tooling costs.
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