Accountants' Handbook, Volume Two, Special Industries and Special Topics, 12th Edition

Chapter 34

Oil, Gas, and Other Natural Resources

Bill Godshall, CPA

Frazier & Deeter, LLC

34.1 Introduction

34.2 Oil and Gas Exploration and Producing Operations

34.3 Accounting for Joint Operations

(a) Operator Accounting

(b) Nonoperator Accounting

(c) Other Accounting Procedures

(d) Overview of Accounting Standards

34.4 Acceptable Accounting Methods

(a) Successful Efforts Method

(i) Basic Rules

(ii) Exploratory versus Development Well Definition

(iii) Treatment of Costs of Exploratory Wells Whose Outcome Is Undetermined

(iv) Successful Efforts Impairment Test

(v) Conveyances

(b) Full Cost Method

(i) Basic Rules

(ii) Exclusion of Costs from Amortization

(iii) Full Cost Ceiling Test

(iv) Conveyances

34.5 Accounting for Natural Gas Imbalances

(a) Sales Method

(b) Entitlements Method

(c) Gas Balancing Example

34.6 Hard-Rock Mining

(a) Mining Operations

(b) Sources of Generally Accepted Accounting Principles

34.7 Accounting for Mining Costs

(a) Exploration and Development Costs

(b) Production Costs

(c) Inventory

(i) Metals and Minerals

(ii) Materials and Supplies

(d) Commodities, Futures Transactions

(e) Reclamation and Remediation

(f) Shutdown of Mines

(g) Accounting for the Impairment of Long-Lived Assets

34.8 Accounting for Mining Revenues

(a) Sales of Minerals

(b) Tolling and Royalty Revenues

34.9 Supplementary Financial Statement Information—Ore Reserves

34.10 Accounting for Income Taxes

34.11 Financial Statement Disclosures

34.12 Sources and Suggested References

34.1 Introduction ...