The new FASB Statement No. 109 on accounting for income taxes requires, among other changes, an asset and liability approach. A Special Report, A Guide to Implementation of Statement 109 on Accounting for Income Taxes, accompanies the statement. The new Interpretation No.39 addresses applicability of the principle of right of setoff to interest rate and currency swaps, options, forwards, and other conditional or exchange contracts. Also in FASB news, Mr. Jennings discusses the significance of Issue No. 91-4, "Hedging Foreign Currency Risks with Purchased Options" and Issue No. 91-6, "Revenue Recognition of Long-Term Power Sales Contracts." Recent SEC rulings impact environmental matters, income taxes, and other oil and gas issues. The AICPA opposes a bill requiring independent auditors to notify the SEC of illegal acts by publicly held companies.

Current Developments in Financial Accounting and Reporting. Jennings, Dennis R., Summer 1992, pp. 1‑11.

The Internal Revenue Service has released the 1991 inflation figures for the §29 credit. Recent rulings concern net profits interest for depletable quantity calculations, survivor's cost depletion on inherited oil interests, production payments, and pipeline advance payments. Legislation is pending concerning the AMT and §29 credit. In Texas Instruments Inc. v. Comm., the Tax Court has ruled that seismic data collected and sold to third parties qualifies as tangible property for investment tax credit purposes.

Current Update in Oil and Gas Taxation. Mark, Richard, Summer 1992, pp. 12‑15.

The spring COPAS meeting saw approval of three new bulletins concerning farmouts\farmins net profits interest, computer production control accounting guidelines, and operator to producer gas availability. In addition to a number of appointment changes within the various committees, the formation of an International Special Committee was announced. The Council unanimously approved A Resolution of Recognition honoring John E. Jolly. Mr. Westbrook reports on the activities of the standing committees.

COPAS: An Update. Westbrook, Jack, Summer 1992, pp. 16‑27.

This issue's Accounting Forum answers questions on accounting for field inventories of crude oil and allocation of book value when a portion of a producing field is sold.

Accounting Forum. Brock, Horace, Summer 1992, pp. 28‑32.

An annual feature of the Journal, this article offers an analysis of the operating and financial performance of 92 of the larger U.S. oil and gas producing companies. Utilizing a comparative format that provides insight into operating and financial trends within the oil and gas industry, this study compiles and analyzes financial statement data, including oil and gas reserve disclosures. Also presented are measures of profitability, solvency risk, and finding cost performance.

A Comparative Analysis of the Operating and Financial Performance of U.S. Oil and Gas Producing Companies for the Years 1989-1991. Boone, Jeff P., Summer 1992, pp. 33‑59.

Prominent among the reactions to falling oil prices have been changes in U.S. exploration and development strategies, a substantial reduction in domestic exploration and development activity, the exiting of many companies from the industry, and the consolidation of oil and gas assets among the remaining companies. Many oil and gas companies are facing the make-or-buy decision--whether to purchase existing reserves to replace production or to find and develop new reserves. This article breaks down the 22 major and 202 publicly traded oil and gas producers studied into two classes based on above or below average purchase of reserves and analyzes the efficacy of the two strategies.

Finding Costs and the Make-or-Buy Decision for Oil and Gas Producers in 1982-1986. Rasmussen, Jon A., Summer 1992, pp. 60‑92.

Relative finding costs are considered a key determinant of a company's stock market value. The heavy use of finding costs data is causing problems, however, because there is as yet no standard for calculating and reporting finding costs. This article analyzes the strengths and weaknesses of conventional techniques for determining finding costs and argues the case for a finding costs measure that is a reliable indicator of future profitability.

Determining Finding Costs. Gaddis, Dwight; Brock, Horace; and Boynton, Charles, Summer 1992, pp. 93‑101.

One of the changes brought about by the moderation of natural gas prices in the mid-1980's in anticipation of natural gas price deregulation was the increase in volume imbalances. As more wellhead owners began selling more or less of their allocable portion of gas, gas balancing agreements were developed to remedy the growing volumetric imbalance condition. This article reviews the accounting for volume imbalances and valuation or settlement methods often applied upon depletion or for periodic cash balancing under a gas balancing agreement.

Accounting for and Valuing Natural Gas Producer Volume Imbalances. Wilson, John L., Summer 1992, pp. 102‑115.

Acceptance of the inevitability of gas imbalances has given rise to the current solution: gas balance agreements. Mr. Farrar asks the reader to reconsider the mental model for dealing with gas imbalances from solving the problem after the fact to avoiding imbalances in the first place and argues that compulsory takes is one alternative the industry should carefully consider.

Why Not Compulsory Takes to End Producer Gas Imbalances. Farrar, Tom, Summer 1992, pp. 116‑119.

This article traces the history of the petroleum depletion allowance in the U.S. from the late nineteenth century to the present day. Through a detailed analysis of tax law, congressional hearings, and court cases, Craig G. Goodman, Director of Energy Tax Policy within the Department of Energy under the Reagan and Bush administrations, helps explain how and why we got to where we are today.

History of the U.S. Petroleum Depletion Allowance: 1890-1990. Goodman, Craig G., Summer 1992, pp. 120‑150.

In a boon to taxpayers, a recent decision by the Ninth Circuit Court of Appeals reversed the position previously held by the IRS and the Tax Court as to the requirements for minimum annual royalty payments by upholding the right to exercise the at-will-termination clause. However, the same court refused to discuss the contingent payment issue involving non recourse loans. The authors analyze the ramifications of the Cheng v. Comm. decision from the perspective of the lessee and the lessor.

Minimum Royalties: Home Run and Walk for Taxpayers in Recent Circuit Court Decision. Billings, B. Anthony; Crumbley, D. Larry; and Bullard, Ruth, Summer 1992, pp. 151‑160.