# ASC 720-45-25: Other Expenses — Business and Technology Reengineering — 25 Recognition

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/720/45/#25-recognition)

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## ASC 720-45-25: 25 Recognition

[Read section](https://asc.understandingaccounting.org/asc/720/45/#25-recognition)

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##### [720-45-25-1](https://asc.understandingaccounting.org/asc/720/45/#720-45-25-1)

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The cost of business process reengineering activities, whether done internally or by third parties, is to be expensed as incurred. This expense treatment also applies when the business process reengineering activities are part of a project to acquire, develop, or implement internal-use software.

##### [720-45-25-2](https://asc.understandingaccounting.org/asc/720/45/#720-45-25-2)

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The following third-party or internally generated costs typically associated with business process reengineering shall be expensed as incurred:

1.  a
    
    Preparation of request for proposal—the process of preparing a proposal.
    
2.  b
    
    Current state assessment—the process of documenting the entity's current business process, except as it relates to current software structure. This activity is sometimes called mapping, developing an as-is baseline, flow charting, and determining current business process structure.
    
3.  c
    
    Process reengineering—the effort to reengineer the entity's business process to increase efficiency and effectiveness. This activity is sometimes called analysis, determining best-in-class, profit and performance improvement development, and developing should-be processes.
    
4.  d
    
    Restructuring the work force—the effort to determine what employee makeup is necessary to operate the reengineered business processes.

##### [720-45-25-3](https://asc.understandingaccounting.org/asc/720/45/#720-45-25-3)

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Internal and third-party personnel involved with current state assessment, process reengineering, and restructuring the work force usually have backgrounds in business function, business control, internal audit, internal control, and so forth. Although some may have information technology and software application expertise, the focus of this effort is on process rather than software systems.

##### [720-45-25-4](https://asc.understandingaccounting.org/asc/720/45/#720-45-25-4)

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Costs typically associated with the acquisition or the construction of property and equipment phase of a business process reengineering project shall be accounted for in accordance with the entity's existing policies for productive assets.