The most important development in the past four months affecting extractive industries accounting was the issuance of an exposure draft of an FASB Statement on Disclosures About Oil and Gas Producing Activities. The major requirements of this Proposed Statement are summarized in this section. In addition, COPAS has announced the revision of one "Bulletin" and one "Interpretation.''

Current Developments. Summer 1982, pp. 7‑16.

In this article, one of three examining full costing in this issue, Messrs. Brock, Klingstedt, and Jones outline the general rules of the full-cost method with special emphasis on amortization calculations and special rules involving mineral conveyances and promotional activities. The article serves as an introduction to the two following articles.

General Guide to the Full-Cost Accounting Method. Brock, Horace R.; Kingstedt, John P.; and Jones, Donald M., Summer 1982, pp. 17‑36.

Mr. Ridenour examines the most troublesome problems associated with the computation of amortization under the SEC's full-cost rules. These include: (1) exclusion of costs from the full-cost pool, (2) capitalization of interest on excluded assets, and (3) the base for calculation of DD&A.

Special Problems in Computing Amortization of Capitalized Costs under Full Costing. Ridenour, P. Dean, Summer 1982, pp. 37‑46.

Smith and Herrmann analyze the need for a ceiling on capitalized costs when the full-cost method is used, discuss the valuation method to be used in computing the ceiling, and identify reserve categories to be included. They also analyze the income tax effects to be considered in applying the ceiling test.

Ceiling Test for Full-Cost Companies. Smith, Philip S. and Herrmann, Michael C., Summer 1982, pp. 47‑58.

Dr. Coe first reviews the legislative history of Black Lung laws and then reviews the methods used to fund Black Lung benefits. Next he examines the accounting issues involved, including the need for accruing estimated benefit costs, the problem of determining the time to record costs, and the measurement problem involved. Dr. Coe concludes that Black Lung benefit costs should be accounted for in much the same way as pension costs.

Accounting for Black Lung Benefit Costs. Coe, Teddy L., Summer 1982, pp. 59‑66.

Alkire, Meisenheimer and Carroll discuss the appropriate treatment of both retained and carved out net profits interests at the time they are created and subsequent to creation. They conclude that the most commonly used approach is to treat a net profits interest as a net overriding royalty interest, but that it may also be accounted for as a carved interest. Both methods are discussed.

Accounting for Net Profits Interests in Oil and Gas Producing Operations. Alkire, Marion H.; Meisenheimer, F. E.; and Carroll, B. Q., Summer 1982, pp. 67‑72.

Mr. Willis explains what an on-line accounting system is, its benefits in specific common oil and gas accounting systems, and some of the pitfalls related to an on-line system. He then discusses the alternatives available for small and mid-size producers interested in acquiring software packages.

Oil and Gas Accounting Systems: Going On-Line. Willis, David W., Summer 1982, pp. 73‑78.

Dr. King discusses methods being used by companies using the successful-efforts method in compliance with the requirements of the SEC which state that impairment must be assessed and recorded, if appropriate, on unproved properties. He analyzes techniques used to record impairment both on properties that are "individually significant" and on groups of properties that are not individually significant.

Impairment Test for Unproved Properties. King, Barry G., Summer 1982, pp. 79‑90.

This research report compiled by Ms. Sue Zant of the Extractive Industries Accounting Research Institute staff summarizes responses from 21 integrated and 20 independent oil and gas producing companies to a survey conducted by the Institute. Among topics covered in the survey are treatment of costs of abandoned portions of exploratory wells that find oil and gas, effects of reserve estimate changes on amortization in interim reports, techniques for recording impairment of unproved properties, valuation of lease inventories of crude oil, application of cost ceiling to leases or fields, capitalization policies for certain costs, accounting for future reclamation costs. and asset transfers.

Survey of Successful-Efforts Accounting Techniques. Summer 1982, pp. 91‑119.