capitalization versus expensing

Expenses1

1. 720-970Real Estate—General720 Other Expenses

   ASC 720-970 addresses when real estate project costs must be expensed rather than capitalized. Its core rules: internal costs of preacquisition activities for a property that will be an operating property at acquisition date are expensed as incurred (720-970-25-1), and indirect costs not clearly related to projects under development or construction — including general and administrative expenses — are charged to expense as incurred (720-970-25-3). The Subtopic defines "operating" property as one where major construction is substantially complete and the property is either available for occupancy upon tenant improvements or already income-producing (720-970-25-2).