Case: Accounting Turbulence at Boeing

1. Put yourself in the shoes of Laurie Pitcher. You received a call from a prominent Boeing investor who asked you what provides the true picture of Boeing's profits: program or unit cost accounting? Capitalizing or expensing? How would you respond? To support your answer, conduct a comparative analysis. Describe the pros and cons between using program accounting and unit-cost accounting and how these are associated with the system's life cycle stages (when applicable.)

2. How is program accounting reflected in Boeing's financial statements? Where is program accounting reflected in Airbus's financials? To support your answer, conduct a financial statement analysis for Boeing and Airbus. Discuss the differences between both accounting system approaches.

3. Discuss the difference between program accounting and the percentage-of-completion method.

4. Explore the definition of an asset and evaluate whether deferred production costs fulfill the definition of an asset.

5. As Boeing's CFO, you know that investors are concerned about Boeing's use of program accounting, which involves significant uncertainty. What are the risks of using this program, and what would you do to mitigate uncertainty?