Boeing 2010 Annual Report Download - page 72

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 and/or insurance carriers. Our policy is to accrue and
charge to current expense identified exposures related to environmental remediation sites based on
our best estimate or the low end of a range of reasonably possible 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, 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, consisting mainly of
uncleared checks, to Accounts payable. Negative balances reclassified to Accounts payable were
$209 and $211 at December 31, 2010 and 2009.
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 application 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.
The determination of net realizable value of long-term contract costs is based upon quarterly reviews
that estimate costs to be incurred to complete all contract requirements. When actual contract costs
and the estimate to complete exceed total estimated contract revenues, a loss provision is recorded.
The determination of net realizable value of commercial aircraft program costs is based upon quarterly
program reviews that estimate revenue and cost to be incurred to complete the program accounting
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