This section contains responses by individuals in industry and public accounting to specific questions raised by our readers.

The Accounting Forum. Fall/Winter 1984, pp. 7.

When should ceiling test computations using the full cost method be included in capitalized costs to be amortized?

Ceiling Test Computations in a New Cost Center for a Public Company Using the Full Cost Method. O'Donnell, Michael F. and Coons, Donald C., Fall/Winter 1984, pp. 7‑10.

Should the well be considered exploratory and hence charged to expense if dry?

Successful Efforts Accounting: Exploratory and Development Well Classifications. Jensen, Peter L. and Cook, Jr., Joseph E., Fall/Winter 1984, pp. 10‑11.

If Company A uses the successful efforts method of accounting, what disposition should it make of the $298,000 uncollectable from Company B? Assuming Company A uses the full cost method, what disposition will it make of the $298,000?

Treatment of Uncollectable Joint-interest Billings. Lumry, Sharon E. and Gearhead, Jerry, Fall/Winter 1984, pp. 12‑14.

The authors analyze the "pooling" and "purchase.' method of. accounting for oil and gas acquisitions, concluding that most present day acquisitions must be accounted for under the purchase method. They then discuss the valuation of unproved and proved properties and how these assets should he recorded.

Accounting for Acquisition of Oil and Gas Properties. Klaver, C. Keith and Watler, D. Hughes, Fall/Winter 1984, pp. 15‑24.

Mr. Williamson points out the need to arrive at lair value of. oil properties to be purchased or sold. Various rule-of-thumb procedures for estimating fair value are reviewed. Special emphasis is placed on the importance of risk weighting. Several case studies of value determination are then presented.

Reserve Estimation: Factors in Developing Fair Market Value. Williamson, Jr., Roy G., Fall/Winter 1984, pp. 25‑28.

An overview of the current gas supply situation suggests that oversupply is likely to continue into the 1985-86 heating season. Mr. Ihloff reviews the problems that have arisen under take-or-pay contracts because of the oversupply, exacerbated by FERC's United rate design. The author discusses the responses of regulatory bodies to the problems and the effects of these responses on producers, pipelines and distributors.

New Marketing Strategies for Natural Gas: The Regulatory Response. Ihloff, T.W., Fall/Winter 1984, pp. 29‑36.

Mr. Mark and Ms. Eason discuss the effects of the "economic performance" concept and tax shelter registration provisions of the 1984 Tax Reform Act on oil and gas companies. The effects of the economic performance rules on both accrual basis and cash basis taxpayers are examined. Various provisions of the tax shelter rules are discussed.

Tax Shelters and Deductibility—Some New Rules for the Oil Industry. Mark, Richard S. and Eason, Patricia, Fall/Winter 1984, pp. 37‑48.

Burke and Durand review the effects of IDC deductions on federal income taxes. on the minimum tax on preferences. and on the windfall profit tax prior to the passage of the Tax Equity and Fiscal Responsibility Act of 1942 (TEFKA). The provisions of TEFRA affecting LDC are discussed. The election given individuals in TEFRA to capitalize all or pan of otherwise deductible IDC is examined in detail. The authors then discuss and illustrate situations in which the taxpayer would be wise to capitalize pan of IDC. The use of EDP models in estimating the effects of IDC is then discussed.

The Election under TEFRA to Capitalize IDC—A Benefit for Some Taxpayers. Burke, Ken and Durand, Francis, Fall/Winter 1984, pp. 49‑60.

The authors argue that the generally depressed state of the mining industry calls for a conservative accounting treatment based on an asset definition tied to the net present value of future cash flows. They demonstrate how this concept might be applied to expenditures incurred in the various stages (pre-operating, exploration, development. production and post-operating) of mining.

Frontier Accounting in the Mining Industry. Grove, Hugh D. and O'Brien, Kevin, Fall/Winter 1984, pp. 61‑74.

In this, the first of three articles in this edition dealing with internal control, theft, and fraud. Mr. Burk describes an approach for studying and evaluating internal accounting controls called Transaction Flow Analysis. Mr. Burk describes how the segregation of an entity's business and the related accounting systems into a financial planning and control function and interrelated cycles facilitates the evaluation of international controls. The control program involves a risk oriented overall review of an entity, a thorough study of the accounting controls in each cycle, an evaluation of the internal control system. and compliance testing.

Studying and Evaluating Internal Accounting Controls in the Oil and Gas Exploration, Development, and Production Industry. Burk, Victor A., Fall/Winter 1984, pp. 75‑84.

Mr. Seckman reviews examples of situations in which crude oil has been stolen or improperly removed. He discusses the need for periodic, unannounced, back gauging by a second person to detect and control theft. Procedures for detecting and combatting equipment theft and fraud are also discussed.

Combatting Oil Field Theft and Fraud. Seckman, John I., Fall/Winter 1984, pp. 85‑90.

In the final article on theft, control. and fraud. Mr. Turner reviews the potential for white collar crime found in the oil and gas industry. He then discusses specific steps that may be taken to prevent fraud, including competitive bidding procedures, adequate supervision of high exposure areas, comprehensive internal and vendor audit programs, and statements on conflicts of interest and illegal and unethical practices.

Preventing White Collar Crime in the Petroleum Industry. Turner, David R., Fall/Winter 1984, pp. 91‑94.

Professors Pearson and Gallun discuss whether step-out wells may be excluded from amortization by full-cost companies under the SEC's Financial Reporting Release No. lit. issued in the fall of 1983. Their discussion centers around whether or not a step-our well is associated with an unproved property. They also discuss the uncertainty resulting from the SEC's statement that unevaluated costs may be excluded from amortization until complete evaluation of the property has been made.

Exclusion of Step Out Well Costs from Full Cost Amortization. Pearson, Della and Gallun, Rebecca, Fall/Winter 1984, pp. 95‑98.

Heazlewood and Chye point out the need for authoritative accounting guidelines for the extractive industries in the countries involved. They review the historical development of such accounting rules in the U.S.A., then discuss specific developments and currently existing standards in each of the three countries.

An Empirical Study of Extractive Industry Financial Reporting Practices in Australia, Malaysia, and New Zealand. Heazlewood, C. T. and Chye, M., Fall/Winter 1984, pp. 99‑122.

This article reports on a survey of selected accounting practices by certain Canadian oil and gas companies using the full-cost method. It compares the results of the survey with the results of a similar survey of U.S. companies conducted in 1982 by the Extractive Industries Accounting Research Institute.

Comparison of American and Canadian Full-Cost Accounting Practices. Tilleman, William A. and Spurrell, A.C. Lloyd, Fall/Winter 1984, pp. 123‑148.

Mr. Huang summarizes in T-account form the basic capitalization rules for publicly held companies using the successful-efforts method and the full cost method of accounting.

A Simplified T-Account Demonstration of the Accounting Methods for Oil and Gas Companies. Huang, Juinn, Fall/Winter 1984, pp. 149‑156.