A continuing column which provides summaries of updates in the area of financial accounting. This issue's column includes: Full Cost Ceiling Test.

Current Developments in Petroleum Accounting. Hall, James D., Summer 1986, pp. 1‑2.

A continuing column which provides short summaries and updates of recent events that affect oil and gas taxation. This issue's topics include: Netting of Income and Expense, WPT Audits, Partnership Audits, Partnership Special Allocations, Proposed Tax Legislation.

Current Developments in Oil and Gas Taxation. Mark, Richard, Summer 1986, pp. 3‑12.

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

The Accounting Forum. Summer 1986, pp. 13‑16.

Mr. Hendrickson and Mr. Keller review the impact of income taxes on the SEC full cost ceiling test. They urge the SEC to amend its rules to eliminate income tax considerations from the ceiling test and thereby enhance the meaningfulness and comparability of financial statements.

Income Taxes in the Full-Cost Ceiling. Hendrickson, Michael D. and Keller, Donald P., Summer 1986, pp. 17‑22.

Messrs. Jensen and Hall review the recently approved AICPA Audit Guide for Oil and Gas Producers. They discuss and describe the five chapters of the audit guide: - Overview of the Oil and Gas Industry, - Business Activities in the Oil and Gas Producing Industry, - Tax Considerations, - Internal Control Considerations, - Auditing

The New AICPA Audit and Accounting Guide: Audits of Entities with Oil and Gas Producing Activities. Jensen, Peter L. and Hall, James D., Summer 1986, pp. 23‑30.

Mr. Wehner explains what "net back" pricing agreements are and how prices of crude oil are determined under such agreements. He concludes that net backs are unlikely to become a controlling factor in determining oil prices.

Net Back Agreements with Producing Countries. Wehner, Paul B., Summer 1986, pp. 31‑34.

Dr. Koch describes the use of cost-volume-profit analysis used to compare the net benefits to the State of Texas from "bonus bids" and "royalty bids" for its offshore oil and gas leases. The general conclusion is that, because of low expected production, the bonus bid system has been more beneficial to the state.

Evaluating Offshore Energy Leases Using Cost-Volume-Profit Analysis. Koch, Bruce S., Summer 1986, pp. 35‑42.

Mr., Svennevik describes oil and gas accounting and reporting practices in Norway, placing special emphasis on the importance that income tax requirements have had. He then surveys principles of accounting for geological and geophysical costs, exploratory well costs, offshore facilities and development costs, financing costs, foreign currency translations, and crude oil inventories. Finally, he compares U.S. and Norwegian accounting practices.

Petroleum Industry Accounting and Reporting in Norway. Svennevik, Arthur T., Summer 1986, pp. 43‑54.

Ms. Nance reviews the dividend-paying patterns of thirty-one large publicly-traded oil and gas companies for the years 1970-1984. Her study suggests that these companies do seek to maintain steady or constantly increase dividend payments. Dividends tend to be constant even though earnings may be quite volatile.

Will U.S. Oil and Gas Companies Pay Dividends in 1986? Nance, Deana, Summer 1986, pp. 55‑64.

This article reports on a study by Messrs. Glascock and Impson of the effect of dividend change announcements for a sample of 21 petroleum firms for the period 1975 through 1982. The authors conclude that a strong signal of a dividend increase generally has a positive impact on stock prices of oil and gas companies.

An Analysis of the Informational Content of Dividend Announcements in the Petroleum Industry. Glascock, John L. and Impson, Michael, Summer 1986, pp. 65‑76.

Professor Eldahrawy has analyzed financial information and supplemental information required by SFAS No. 69 for 14 oil and gas companies that "failed" in the period 1980-1984. Certain relationships between financial data and/or reserve data were examined for each of the three years before the year of failure. These relationships were compared with identical relation ships for 14 "matched non-failed" firms. Eldahrawy concludes that SFAS No. 69 data are useful by themselves or as supplements to financial statements in assessing the financial position of an oil or gas company.

The Effect of SEAS No. 69 Signals on the Discriminant and Predictive Ability of Financial Reporting for Business Failure in the Oil and Gas Industry. Eldahrawy, Kamal, Summer 1986, pp. 77‑88.

Ms. Leeds has written an interesting account of the early days of the American Petroleum Industry. Much of her paper deals with development of different forms of transportation. Her discussion of the development of the oil and gas lease contract will be of special interest to petroleum accountants.

The Early Development of the American Oil Industry: 1859 -1872. Leeds, Patricia, Summer 1986, pp. 89‑101.