Extractive Activities—Oil and Gas

This Subtopic applies equity method and joint venture accounting to the oil and gas industry. Its core point is that joint interest (joint venture) operations, in which working interest owners retain an undivided interest in a jointly operated property run by a designated operator, are usually reflected by including the investor's proportional share of the revenues, expenses, and assets directly in its financial statements rather than by a one-line equity method presentation.

For students. Oil and gas joint interests are one of the few settings where proportional (pro rata) presentation is accepted instead of the equity method; the common mistake is assuming every jointly controlled venture must be a one-line equity method investment, when an undivided interest in an unincorporated arrangement is typically shown line-by-line.

Machine-generated study aid for ASC 323-932. Check the source paragraphs below.