Boeing 2010 Annual Report Download - page 70

For operating leases, revenue on leased aircraft and equipment is recorded on a straight-line basis
over the term of the lease. Operating lease assets, included in Customer financing, are recorded at
cost and depreciated over the period that we project we will hold the asset to an estimated residual
value, using the straight-line method. Prepayments received on operating lease contracts are classified
as Other long-term liabilities on the Consolidated Statements of Financial Position. We periodically
review our estimates of residual value and recognize forecasted changes by prospectively adjusting
depreciation expense.
For notes receivable, notes are recorded net of any unamortized discounts and deferred incremental
direct costs. Interest income and amortization of any discounts are recorded ratably over the related
term of the note.
Reinsurance Revenue Our wholly-owned insurance subsidiary, Astro Ltd., participates in a
reinsurance pool for workers’ compensation. The member agreements and practices of the
reinsurance pool minimize any participating members’ individual risk. Reinsurance revenues were
$139, $122 and $83 during 2010, 2009 and 2008, respectively. Reinsurance costs related to premiums
and claims paid to the reinsurance pool were $123, $118 and $86 during 2010, 2009 and 2008,
respectively. Revenues and costs are presented net in Cost of services in the Consolidated
Statements of Operations.
Fleet Support
We provide assistance and services to facilitate efficient and safe aircraft operation to the operators of
all our commercial airplane models. Collectively known as fleet support services, these activities and
services include flight and maintenance training, field service support, engineering services, and
technical data and documents. Fleet support activity begins prior to aircraft delivery as the customer
receives training, manuals, and technical consulting support. This activity continues throughout the
aircraft’s operational life. Services provided after delivery include field service support, consulting on
maintenance, repair, and operational issues brought forth by the customer or regulators, updating
manuals and engineering data, and the issuance of service bulletins that impact the entire model’s
fleet. Field service support involves our personnel located at customer facilities providing and
coordinating fleet support activities and requests. The costs for fleet support are expensed as incurred
as Cost of services.
Research and Development
Research and development includes costs incurred for experimentation, design, testing, and bid and
proposal efforts related to government products and services which are expensed as incurred unless
the costs are related to certain contractual arrangements with customers. Costs that are incurred
pursuant to such contractual arrangements are recorded over the period that revenue is recognized,
consistent with our contract accounting policy. We have certain research and development
arrangements that meet the requirement for best efforts research and development accounting.
Accordingly, the amounts funded by the customer are recognized as an offset to our research and
development expense rather than as contract revenues.
We have established cost sharing arrangements with some suppliers for the 787 program. Our cost
sharing arrangements state that the supplier contributions are for reimbursements of costs we incur for
experimentation, basic design, and testing activities during the 787 development. In each arrangement,
we retain substantial rights to the 787 part or component covered by the arrangement. The amounts
received from these cost sharing arrangements are recorded as a reduction to research and
development expenses since we have no obligation to refund any amounts received per the
arrangements regardless of the outcome of the development efforts. Specifically, under the terms of
each agreement, payments received from suppliers for their share of the costs are typically based on
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