# ASC 720-45: Business and Technology Reengineering

ASC 720-45 governs the accounting for business-process and technology reengineering costs — which are expensed, even when bundled into a software project.

**In plain terms:** when a company overhauls how it works — redesigning processes and the systems behind them — ASC 720-45 says the reengineering effort itself is an operating expense, not an asset.

ASC 720-45 (Other Expenses — Business and Technology Reengineering) addresses costs incurred during process-reengineering projects, including those bundled with software development or system integration. The core rule: the cost of the reengineering activity itself — process analysis, redesign, change management, training — is **expensed as incurred**, even when a third party performs it as part of a larger software project.

Software and system-integration costs in the same project follow their own standard — internal-use software is covered by [ASC 350-40](/software-capitalization/glossary/asc-350-40) — so a single initiative often splits: the software that builds a lasting asset can be capitalized, while the reengineering work around it is expensed.

**See also:** the [software capitalization guide](/software-capitalization).

## Capitalize software development costs in Jira — without the manual work

Quantify turns Jira activity into audit-ready software-capitalization data automatically — no manual timesheets.

[Talk to us about capex](https://www.quantifyhq.com/contact?utm_campaign=capex)