# ASC 720-970-25: Other Expenses — Real Estate—General — 25 Recognition

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/720/970/#25-recognition)

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## ASC 720-970-25: 25 Recognition

[Read section](https://asc.understandingaccounting.org/asc/720/970/#25-recognition)

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### Real Estate Project Costs

#### Preacquisition Costs

##### [720-970-25-1](https://asc.understandingaccounting.org/asc/720/970/#720-970-25-1)

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Internal costs of preacquisition activities incurred in connection with the acquisition of a property that will be classified as operating at the date of acquisition shall be expensed as incurred.

##### [720-970-25-2](https://asc.understandingaccounting.org/asc/720/970/#720-970-25-2)

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A property would be considered operating if, at the date of acquisition, major construction activity (as distinguished from activities such as routine maintenance and cleanup) is substantially completed on the property and either of the following conditions exists:

1.  a
    
    It is held available for occupancy upon completion of tenant improvements by the acquirer.
    
2.  b
    
    It is already income-producing.

#### Indirect Costs

##### [720-970-25-3](https://asc.understandingaccounting.org/asc/720/970/#720-970-25-3)

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Indirect costs that do not clearly relate to projects under development or construction, including general and administrative expenses, shall be charged to expense as incurred.