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If the modifications of interior configurations of certain aircraft types enhance the usefulness of the aircraft, the costs associated with the changes shall be capitalized.
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Air carriers shall adopt an accounting method that recognizes overhaul expenses in the appropriate period. This may result in different methods for different aircraft, as well as different methods for airframe overhauls and engine overhauls. The method chosen shall recognize, among other things, the carrier's operating practices with respect to airframe and engine overhauls. The following accounting methods are permitted:
  1. a
    The direct expensing method, addressed in Subtopic 908-720 (see paragraph 908-720-25-3)
  2. b
    The built-in overhaul method, addressed in this Subtopic
  3. c
    The deferral method, addressed in this Subtopic.
As indicated in paragraph 360-10-25-5, the use of the accrue-in-advance (accrual) method of accounting for planned major maintenance activities is prohibited in annual and interim financial reporting periods.
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