# ASC 720-908-25: Other Expenses — Airlines — 25 Recognition

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/720/908/#25-recognition)

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## ASC 720-908-25: 25 Recognition

[Read section](https://asc.understandingaccounting.org/asc/720/908/#25-recognition)

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#### Developmental Costs

##### [720-908-25-1](https://asc.understandingaccounting.org/asc/720/908/#720-908-25-1)

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Because of the current deregulated environment and the uncertainty regarding the recoverability of route [developmental costs](https://asc.understandingaccounting.org/glossary/d/#developmental-costs "Developmental costs include those types of costs directly related to the development of new routes (or extension of existing routes), such as advertising and promotion expenses, related travel and incidental expenses, and expenses of regulatory proceedings."), such costs related to the preparation of operations of new routes shall not be capitalized. Route expansion or alteration has become a recurring activity among the airlines, and any related cost shall be considered a normal and recurring cost of conducting business.

#### Preoperating Costs

##### [720-908-25-2](https://asc.understandingaccounting.org/asc/720/908/#720-908-25-2)

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[Preoperating costs](https://asc.understandingaccounting.org/glossary/p/#preoperating-costs "Preoperating costs include flight crew training, maintenance training, prerevenue flight expenses, insurance, and depreciation. Preoperating costs relate directly to specific preoperating projects, such as the preparation for operation of new routes or integration of new types of aircraft.") shall be expensed as incurred rather than capitalized.

#### Overhaul Costs—Direct Expensing Method

##### [720-908-25-3](https://asc.understandingaccounting.org/asc/720/908/#720-908-25-3)

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Paragraph [908-360-25-2](https://asc.understandingaccounting.org/asc/360/908/#360-908-25-2) provides guidance on accounting methods for overhaul expenses. Most carriers recognize the cost of overhauls as expenses as they are incurred because, in the case of carriers with large fleets, such costs are relatively constant from period to period.

#### Rotables

##### [720-908-25-4](https://asc.understandingaccounting.org/asc/720/908/#720-908-25-4)

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The cost of repairing rotables shall be charged to expense as it is incurred. See also guidance in paragraphs [908-360-35-2](https://asc.understandingaccounting.org/asc/360/908/#360-908-35-2) and [908-360-45-1](https://asc.understandingaccounting.org/asc/360/908/#360-908-45-1) concerning rotables.