“Don’t fire until you see the whites of their eyes.”
—Attributed to Colonel William Prescott at the Battle of Bunker Hill, June 17, 1775
A Personal Legacy at Bunker Hill
On the morning of June 17, 1775, my great, great, great, great, great-grandfather, John Hood, stood watch near Charlestown, Massachusetts. He was just 15 years old, assigned to picket duty, a critical and dangerous role. As British man-of-war ships fired on colonial positions from the Charles River, John’s task was to monitor and report on any movement that might signal a landing. ¹ His story, passed down through generations, connects me to a pivotal moment in American history: the Battle of Bunker Hill.
That battle, which was technically fought on Breed’s Hill, not Bunker Hill, involved a hastily built fortification called a redoubt. It was an act of rapid preparation and strategic investment by colonial forces hoping to deter the British from seizing the high ground overlooking Boston. While the redoubt was eventually overrun, it served its purpose in delaying the British and galvanizing colonial resistance².
Surprisingly, this 18th-century story offers a useful analogy to a very modern question: How do we account for the costs of preparation when they may or may not lead to success?
Contract Fulfillment Costs in Modern Accounting
Under ASC 340-40, companies are allowed to capitalize certain fulfillment costs associated with revenue contracts, but only when specific criteria are met. These include:
- The cost relates directly to a contract or to an anticipated contract that a company can specifically identify.
- The cost generates or enhances resources used to satisfy performance obligations.
- The cost is expected to be recovered.
When we consider the redoubt on Breed’s Hill, it fits the first two criteria perfectly. Colonial soldiers under Colonel William Prescott constructed it overnight, using shovels, pickaxes, and carts, digging trenches and stacking earthworks about 130 feet per side with six-foot-high walls3. This redoubt was a physical resource directly tied to their goal: defending Boston Harbor.
But the third criterion, recoverability, is less clear. The colonial forces were eventually dislodged after the British launched a direct assault, suffering over 1,000 casualties, nearly three times the American losses. Was the investment “recovered”? In a military sense, yes—British progress was slowed, morale among colonial troops surged, and the event inspired increased support for independence4. But the redoubt itself was lost.
This mirrors a challenge modern businesses face: deciding whether upfront costs will ultimately yield value. Particularly for those businesses in the long-term construction and services industries. Not every investment leads to revenue. But many, especially those rooted in fulfilling contracts, should be capitalized when the criteria in ASC 340-40 are met.
The Cost of Vigilance
John Hood’s picket duty involved constant observation and immediate communication. His exposure to enemy fire from British naval vessels—likely the HMS Somerset and HMS Lively, both armed man-of-war ships—was not only brave but essential to the colonial army’s preparedness5.
In today’s accounting, this kind of vigilance is embodied in how we monitor and assess capitalized costs for amortization and impairment. Per ASC 340-40, these assets must be amortized on a systematic basis that aligns with the transfer of goods or services to the customer. If conditions change, companies must test for impairment and write down the value as appropriate.
Like those early patriots, businesses must stay alert to changing circumstances. Just as John Hood watched the river for enemy movements, accountants must monitor the recoverability of costs through shifting markets, client demands, and evolving risks.
Looking Back to Look Forward
The redoubt at Breed’s Hill was temporary, but its symbolism endures. It was a physical representation of faith in a future, built hastily but purposefully under cover of night, with the hope that it would hold. The accounting concept of fulfillment cost capitalization rests on similar principles—investing in resources that will deliver value, even when uncertainty looms.
History teaches us that not all investments yield direct returns, but those that do must be recognized systematically and thoughtfully. And sometimes, as was the case in 1775, the value comes not in permanence, but in what was inspired, protected, or made possible.
As I reflect on my ancestor’s small but meaningful role in a much larger story, I’m reminded that good accounting—like good defense—is about understanding what we’ve built, why we built it, and what we can reasonably expect in return.
Endnotes
- Boss, Charles. John Hood of Lynn, Massachusetts. https://archive.org/details/johnhoodoflynnma00inboss
- Philbrick, Nathaniel. Bunker Hill: A City, a Siege, a Revolution. 2013.
- Frothingham, Richard. History of the Siege of Boston. 1849.
- Fischer, David Hackett. Paul Revere’s Ride. 1994.
- Lanning, Michael. The American Revolution 100: The Battles, People, and Events of the American War for Independence. 2009.