The editor reviews some of the pronouncements of authoritative bodies and other developments of the past year that have affected accounting and financial reporting in the extractive industries.

Current Developments. Spring 1982, pp. 11‑20.

Mr. Adkerson reviews the economic developments leading to the recent surge in transfers of oil and gas properties to "exchange companies," discusses application of the purchase method and pooling method of accounting for properties acquired, and reviews the position of the SEC's staff toward exchange accounting.

Accounting for Oil and Gas Exchange Offers. Adkerson, Richard, Spring 1982, pp. 21‑40.

Grier and Moore review the background of the controversy over deferred taxes in the oil and gas industry, discuss the basic timing differences between financial accounting and tax accounting, the problem of interaction between IDC and percentage depletion and analyze the problem of treating "excess percentage depletion" as a permanent difference not requiring tax allocation.

Accounting for Deferred Income Taxes. Grier, Richard and Moore, C. H., Spring 1982, pp. 41‑56.

Ms. Burrow reviews the required accounting treatment of dry holes under the successful-efforts method, the importance of the distinction between exploratory wells and development wells and the requirements for a well to be classified as "development." She concludes that very few dry holes should be classified as development wells.

Treatment of Dry Holes under the Successful Efforts Method of Accounting—A Definitional Problem. Burrow, Jackie, Spring 1982, pp. 57‑62.

Professors Deakin and Deitrick summarize the results of a survey of 190 financial analysts regarding disclosure requirements for oil and gas companies. They conclude that a vast majority of financial analysts find companies' own reserve value estimates useful and that a substantial majority strongly prefer the inclusion of RRA-type values of proved reserves in financial reports of oil and gas producers. They also find that three out of four analysts responding favored an association of changes in reserve values with evaluated costs in a supplemental statement of oil and gas producing activities. However, far fewer analysts find the requirements of FASB Statements 33 and 39 useful.

Evaluation of RRA and Other Supplemental Disclosures by Financial Analysts. Deakin, Ed and Deitrick, Jim, Spring 1982, pp. 63‑70.

Mr. Avard reviews the results of interviews with 25 oil and gas analysts concerning disclosure requirements for oil and gas companies. He finds strong support for requiring proved reserve quantity disclosures, but (contrary to Professors Deakin and Deitrick in the immediately preceding article) finds only a slight majority favoring value disclosures, with no consensus of how value should be reported. He finds little support for the SEC's measure of performance based on changes in value.

Disclosures of Reserve Quantities, Reserve Values, and Performance Measures. Avard, Stephen L., Spring 1982, pp. 71‑76.

Ms. Wright examines the nature of future reclamation costs of oil and gas producers in such situations as offshore or the North Slope of Alaska. She analyzes the problems of recording related assets, liabilities, and expenses from the viewpoint of generally accepted accounting principles, concluding that the nature and magnitude of removal and reclamation costs requires recording of an asset and liability at the time of development.

Accounting for Reclamation Costs of Oil and Gas Operators. Wright, Charlotte, Spring 1982, pp. 77‑106.

Professor King reports on the first stage of an ongoing project to evaluate disclosure requirements of the FASB and the SEC, especially reserve quantity and value disclosures. He concludes that quantity disclosures are relevant and should be required, that the RRA earnings summary is not meaningful, that reconciliation of net present values provides little information not contained elsewhere and should be discontinued, but that an exit value based on future net revenues from oil and gas is meaningful. Professor King presents "common-sized" RRA statements for 128 companies.

Oil and Gas Disclosure: Some Empirical Results. King, Barry G., Spring 1982, pp. 107‑127.