ASC

ASC 330-932

Extractive Activities—Oil and Gas

330 Inventory

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In brief

IntermediateSubsequent measurementIndustry-specificInventory and PP&EFair value

This Subtopic governs inventory accounting for entities in the oil and gas (extractive activities) industry, borrowing the scope of ASC 932-10-15. Its core rules are prohibitions: energy trading contracts that are not derivatives under Topic 815 may not be subsequently measured at fair value through earnings, and physical inventories may not be measured at fair value unless another Topic permits it. Exchanges (buying and selling inventory with the same counterparty) are directed to ASC 845-10-15-5 through 15-9.

Key points (4)
  • The Subtopic addresses accounting for inventory in the oil and gas industry (330-932-05-1) and adopts the scope of Section 932-10-15 (330-932-15-1).
  • Energy trading contracts that do not qualify as derivatives under Topic 815 shall not be subsequently measured at fair value through earnings (330-932-35-1).
  • Entities shall not measure physical inventories at fair value except as provided by guidance in other Topics (330-932-35-1).
  • For inventory exchanges — buying and selling inventory with the same counterparty — apply paragraphs 845-10-15-5 through 15-9 (330-932-35-2).

For students. The takeaway is that oil and gas companies cannot mark physical inventories or non-derivative energy trading contracts to market through earnings — a rule that reversed earlier trading-book practice. Students often wrongly assume commodity inventories in energy are always fair-valued; fair value applies only where another Topic (e.g., 815 for true derivatives) allows it.

energy trading contractsphysical inventoryfair value measurement prohibitioninventory exchanges with same counterpartyoil and gas extractive activitiesnonmonetary transactions

Machine-generated study aid for ASC 330-932. Check the source paragraphs below.

330-932-00Status

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330-932-00-1
The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
932-330-35-1AmendedAccounting Standards Update No. 2016-1912/14/2016
932-330-35-1AmendedAccounting Standards Update No. 2012-0410/01/2012

330-932-05Overview and Background

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330-932-05-1
This Subtopic addresses accounting for inventory in the oil and gas industry.

330-932-15Scope and Scope Exceptions

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Overall Guidance

330-932-15-1
This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 932-10-15.

330-932-35Subsequent Measurement

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330-932-35-1
Energy trading contracts that are not accounted for as derivatives in accordance with Topic 815 on derivatives and hedging shall not be measured subsequently at fair value through earnings. Entities shall not measure physical inventories at fair value, except as provided by guidance in other Topics.

Exchanges of Inventory

330-932-35-2
For exchanges of inventories, the buying and selling of inventory with the same counterparty, see paragraphs
845-10-15-5 through 15-9
.

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