Abstract The article presents information on accounting aspects of contract settlement. Termination of war contracts refers to the termination or cancellation of work under a prime contract for the convenience of or at the option of the government, or of work under a subcontract for any reason. Termination may be complete or partial. However, "termination" does not include cancellation for default of the contractor. Quantity changes under "changes" articles or similar contract provisions or by agreement are considered "terminations." If such changes do not involve substantial or complicated problems, they should be handled under a "changes" article rather than under a termination article. The major problems of termination are the determination of the amount of settlement to be made with the contractor, the disposition of termination inventory and the provision of interim financing for the contractor. This paper is concerned only with the problem of determining the payment to be made to contractors under fixed-price prime or subcontracts. The Act (Contract Settlement Act of 1944) covers the settlement at termination of both cost plus a fixed-fee and fixed-price contracts.
Gaa et al. (Mon,) studied this question.