Q. We are working on a project that we intend to capitalize and write off so I have a few questions related to capitalizing assets for government costing purposes.  In addition to labor costs, can we include material and ODCs?  Can it be considered an overhead project?  Should we include overhead and G&A costs (we don’t for financial costing purposes)?

A. Yes to all.  You should capitalize all direct costs including material and ODCs.  You can consider it an overhead project in the sense that the amortization costs (e.g. depreciation) will be included in your overhead cost pool.  For purposes of computing overhead and G&A costs, direct costs of all projects including capitalized projects must be included in the relevant overhead and G&A bases so you might as well include these expenses in the capitalized account for government costing purposes.

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