# ASC 720-908: Other Expenses — Airlines Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/720/908/) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-10T01:09:26.801Z to 2026-09-10T01:09:37.136Z Record version: sha256:1134d8238d555e48347632a80227654ff689519d53619163340f15063e90acb2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 720-908: Other Expenses — Airlines ### Machine-generated study aids ```json { "summary": "ASC 720-908 governs how airlines account for route developmental costs, preoperating costs, and certain maintenance/overhaul costs. The core rule is expense-as-incurred: because route expansion is a normal, recurring activity in a deregulated environment with uncertain recoverability, these costs may not be capitalized. It also addresses the direct expensing method for overhauls and the cost of repairing rotables.", "key_points": [ "The Subtopic covers developmental costs (including those directly related to developing new routes), preoperating costs (including initial preparation for a new route or new aircraft type), and overhaul costs under the direct expensing method (720-908-05-1).", "Route developmental costs related to preparing operations of new routes shall not be capitalized because deregulation makes recoverability uncertain and route expansion or alteration is a normal, recurring cost of doing business (720-908-25-1).", "Preoperating costs shall be expensed as incurred rather than capitalized (720-908-25-2).", "Under the direct expensing method most carriers expense overhaul costs as incurred, since for large fleets such costs are relatively constant period to period; accounting method alternatives are in 908-360-25-2 (720-908-25-3).", "The cost of repairing rotables shall be charged to expense as incurred, with related guidance at 908-360-35-2 and 908-360-45-1 (720-908-25-4).", "Scope follows the airline Overall Subtopic scope in Section 908-10-15 (720-908-15-1)." ], "categories": [ "Recognition", "Industry-specific", "Inventory and PP&E" ], "audience_level": "intermediate", "student_note": "This is a bright-line \"no capitalization\" rule: airlines cannot defer start-up-type route and preoperating costs even though they expect future benefits. Students often confuse the direct expensing method for overhauls (720-908) with the built-in overhaul and deferral methods addressed in 908-360.", "related_topics": [ "908-10", "908-360", "720-15", "360-10" ], "key_concepts": [ "route developmental costs", "preoperating costs", "expense as incurred", "overhaul costs", "direct expensing method", "rotables", "airline industry", "capitalization prohibition" ] } ``` Source downloaded (UTC): 2026-09-10T01:09:26.801Z to 2026-09-10T01:09:26.801Z Record version: sha256:a13509b8a15594796313ddb948a022cf632121d90460879071a66041f0ca1542 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 720-908-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/720/908/#00-status) SEC content: no ##### [720-908-00-1](https://asc.understandingaccounting.org/asc/720/908/#720-908-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:09:26.801Z to 2026-09-10T01:09:26.801Z Record version: sha256:ebb2ca258736e3c728290cc8b9ac9914f6611ab6a6f0f042c98bb1d9c5d0a198 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
908-720-25-1AmendedAccounting Standards Update No. 2014-0905/28/2014
Source downloaded (UTC): 2026-09-10T01:09:28.531Z to 2026-09-10T01:09:28.531Z Record version: sha256:80a7f4d461a7312c4512036c428642ef7a058587977b96547ff318c7f3407f7f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 720-908-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/720/908/#05-overview-and-background) SEC content: no ##### [720-908-05-1](https://asc.understandingaccounting.org/asc/720/908/#720-908-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:09:28.531Z to 2026-09-10T01:09:28.531Z Record version: sha256:dff234cd413fd60827a67129ebaae0dd6a80ee7bf73638d71afc314db19f6852 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides accounting guidance for the following costs for entities in the airline industry: 1. a [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."), including those directly related to the development of new routes 2. b [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."), including initial preparation costs for a new route or new type of aircraft 3. c Overhaul costs using the direct expensing method. Source downloaded (UTC): 2026-09-10T01:09:31.012Z to 2026-09-10T01:09:31.012Z Record version: sha256:38ab6a2ddb979f24ebc3ba523b5647bcb73c63550457748620d06d94d04f4662 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 720-908-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/720/908/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [720-908-15-1](https://asc.understandingaccounting.org/asc/720/908/#720-908-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:09:31.012Z to 2026-09-10T01:09:31.012Z Record version: sha256:d760cb5deb6010257ad445e2753a1266ecbde4c1134c651ab69fce9589d92ebd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 908-10-15. Source downloaded (UTC): 2026-09-10T01:09:37.136Z to 2026-09-10T01:09:37.136Z Record version: sha256:a2ce8405724f491e03fb418f6d14e53f205c65dd44303f843ceb07b4bca8c909 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 720-908-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/720/908/#25-recognition) SEC content: no #### Developmental Costs ##### [720-908-25-1](https://asc.understandingaccounting.org/asc/720/908/#720-908-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:09:37.136Z to 2026-09-10T01:09:37.136Z Record version: sha256:bdd049abbda9315c07905a1dfb644dd6d5e47e04cc3eacf29d81455df1d6954c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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) Pending content: no Source downloaded (UTC): 2026-09-10T01:09:37.136Z to 2026-09-10T01:09:37.136Z Record version: sha256:60df1707a0d33c4fe513858c2d37f197ef858abfecb15bed54739c5a63fa7500 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [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) Pending content: no Source downloaded (UTC): 2026-09-10T01:09:37.136Z to 2026-09-10T01:09:37.136Z Record version: sha256:854e46f020397fe272e49e45eb804d0f203910ef1d9b31bde54b2fc22acc80e3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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) Pending content: no Source downloaded (UTC): 2026-09-10T01:09:37.136Z to 2026-09-10T01:09:37.136Z Record version: sha256:6a7b9675e764696af7a3953c56131d5965c4ce585552545bbcff16bd94e5be50 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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.