# ASC 360-932-40: Property, Plant, and Equipment — Extractive Activities—Oil and Gas — 40 Derecognition Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/360/932/#40-derecognition) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-10T00:09:06.510Z to 2026-09-10T00:09:06.510Z Record version: sha256:cbd33576fc4108dbfe504cd1419c399ebceec3ec53363e1694fb4281f682d434 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 360-932-40: 40 Derecognition [Read section](https://asc.understandingaccounting.org/asc/360/932/#40-derecognition) SEC content: no #### Surrender or Abandonment of Properties ##### [360-932-40-1](https://asc.understandingaccounting.org/asc/360/932/#360-932-40-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:09:06.510Z to 2026-09-10T00:09:06.510Z Record version: sha256:6f2e8a43763ab9d40cc0c33cfc2cddcc029bcef168a8594e0b1ac583caf65e23 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When an unproved property is surrendered, abandoned, or otherwise deemed worthless, capitalized acquisition costs relating thereto shall be charged against the related allowance for impairment to the extent an allowance has been provided; if the allowance previously provided is inadequate, a loss shall be recognized (see Topic 410 for asset retirement obligations). ##### [360-932-40-2](https://asc.understandingaccounting.org/asc/360/932/#360-932-40-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:09:06.510Z to 2026-09-10T00:09:06.510Z Record version: sha256:258aa4c8ad4f466b07c6bd7d09d09c994e7bd131aef30af3cb41928ef16c5554 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a well has not found proved reserves, the capitalized costs of drilling the well, net of any salvage value, shall be charged to expense. The costs of an [exploratory well](https://asc.understandingaccounting.org/glossary/e/#exploratory-well "An exploratory well is a well drilled to find a new field or to find a new reservoir in a field previously found to be productive of oil or gas in another reservoir. Generally, an exploratory well is any well that is not a development well, a service well , or a stratigraphic test well.") or exploratory-type [stratigraphic test well](https://asc.understandingaccounting.org/glossary/s/#stratigraphic-test-well "A stratigraphic test is a drilling effort, geologically directed, to obtain information pertaining to a specific geologic condition. Such wells customarily are drilled without the intention of being completed for hydrocarbon production. This classification also includes tests identified as core tests and all types of expendable holes related to hydrocarbon exploration. Stratigraphic tests are classified as exploratory-type if not drilled in a proved area or development-type if drilled in a proved area.") shall be charged to expense if the well is determined not to have found proved reserves. ##### [360-932-40-3](https://asc.understandingaccounting.org/asc/360/932/#360-932-40-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:09:06.510Z to 2026-09-10T00:09:06.510Z Record version: sha256:3a8672fc0a0d0c91acba383b0be82a814efff0b25e23c2ad670e07b1c917572f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Normally, no gain or loss shall be recognized if only an individual well or individual item of equipment is abandoned or retired or if only a single lease or other part of a group of [proved properties](https://asc.understandingaccounting.org/glossary/p/#proved-properties "Proved properties are properties with proved reserves.") constituting the amortization base is abandoned or retired as long as the remainder of the property or group of [properties](https://asc.understandingaccounting.org/glossary/p/#properties "Mineral interests in properties (hereinafter referred to as properties), which include all of the following: Fee ownership or a lease Concession Other interest representing the legal right to produce or a revenue interest in the production of oil or gas subject to such terms as may be imposed by the conveyance of that interest. Properties also include: Royalty interests Production payments payable in oil or gas Other nonoperating interests in properties operated by others. Properties include those agreements with foreign governments or authorities under which an entity participates in the operation of the related properties or otherwise serves as producer of the underlying reserves (see paragraph 932-235-50-7); but properties do not include other supply agreements or contracts that represent the right to purchase (as opposed to extract) oil and gas. Properties are classified as proved properties or unproved properties.") continues to produce oil or gas. Instead, the asset being abandoned or retired shall be deemed to be fully amortized, and its cost shall be charged to accumulated depreciation, depletion, or amortization. When the last well on an individual property (if that is the amortization base) or group of properties (if amortization is determined on the basis of an aggregation of properties with a common geological structure) ceases to produce and the entire property or property group is abandoned, gain or loss shall be recognized. Occasionally, the partial abandonment or retirement of a proved property or group of proved properties or the abandonment or retirement of wells or related equipment or facilities may result from a catastrophic event or other major abnormality. In those cases, a loss shall be recognized at the time of abandonment or retirement. #### Mineral Property Conveyances and Related Transactions ##### [360-932-40-4](https://asc.understandingaccounting.org/asc/360/932/#360-932-40-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:09:06.510Z to 2026-09-10T00:09:06.510Z Record version: sha256:7e05df3bf07323ba6923fab8ee42638e58a1ef521ae3fe5847d4ef0188e66fc4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Mineral interests](https://asc.understandingaccounting.org/glossary/m/#mineral-interests "See Properties.") in properties are frequently conveyed to others for a variety of reasons, including the desire to spread risks, to obtain financing, to improve operating efficiency, and to achieve tax benefits. Conveyances of those interests may involve the transfer of all or a part of the rights and responsibilities of operating a property (operating interest). The transferor may or may not retain an interest in the oil and gas produced that is free of the responsibilities and costs of operating the property (a nonoperating interest). A transaction may, on the other hand, involve the transfer of a nonoperating interest to another party and retention of the operating interest. ##### [360-932-40-5](https://asc.understandingaccounting.org/asc/360/932/#360-932-40-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:09:06.510Z to 2026-09-10T00:09:06.510Z Record version: sha256:e46335fe37d509a3759f070f8cb9ed248698772ab1d682aee59c6005b5973444 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Implementation guidance for different types of conveyances can be found in paragraphs [932-360-55-2 through 55-14](https://asc.understandingaccounting.org/asc/360/932/#360-932-55-2) . ##### [360-932-40-6](https://asc.understandingaccounting.org/asc/360/932/#360-932-40-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:09:06.510Z to 2026-09-10T00:09:06.510Z Record version: sha256:f1ab4e2251d47c47c60807863134aa5651d688b9ede64df0377911263e6b5ade Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Certain conveyance transactions are in substance borrowings repayable in cash or its equivalent and shall be accounted for as borrowings (see paragraph [932-470-25-1](https://asc.understandingaccounting.org/asc/470/932/#470-932-25-1)). ##### [360-932-40-7](https://asc.understandingaccounting.org/asc/360/932/#360-932-40-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:09:06.510Z to 2026-09-10T00:09:06.510Z Record version: sha256:f7e1fdf9b5cd67c0e7bc81cf488d8c40713728c699824706792179ed68c52350 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In a pooling of assets in a joint undertaking intended to find, develop, or produce oil or gas from a particular property or group of properties, gain or loss shall not be recognized at the time of the conveyance. ##### [360-932-40-8](https://asc.understandingaccounting.org/asc/360/932/#360-932-40-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:09:06.510Z to 2026-09-10T00:09:06.510Z Record version: sha256:cbd58e71cbcde7d02482084d5ce2de76d11998712c0492f137d706f4d590ef67 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In both of the following types of conveyances, gain shall not be recognized at the time of the conveyance (see paragraphs [932-360-55-2 through 55-8](https://asc.understandingaccounting.org/asc/360/932/#360-932-55-2) ): 1. a A part of an interest owned is sold and substantial uncertainty exists about recovery of the costs applicable to the retained interest. 2. b A part of an interest owned is sold and the seller has a substantial obligation for future performance, such as an obligation to drill a well or to operate the property without proportional reimbursement for that portion of the drilling or operating costs applicable to the interest sold. ##### [360-932-40-9](https://asc.understandingaccounting.org/asc/360/932/#360-932-40-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:09:06.510Z to 2026-09-10T00:09:06.510Z Record version: sha256:9eb565ce77195336a13f7c9326a529c1b94a25f122bfd09bd38141a3e15a5114 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a conveyance is not one of the types described in paragraphs [932-360-40-7 through 40-8](https://asc.understandingaccounting.org/asc/360/932/#360-932-40-7) , gain or loss shall be recognized unless there are other aspects of the transaction that would prohibit such recognition under accounting principles applicable to entities in general (see paragraphs [932-360-55-8 through 55-14](https://asc.understandingaccounting.org/asc/360/932/#360-932-55-8) ). #### Completed Exploratory Well Information Available after Balance Sheet Date ##### [360-932-40-10](https://asc.understandingaccounting.org/asc/360/932/#360-932-40-10) Pending content: no Source downloaded (UTC): 2026-09-10T00:09:06.510Z to 2026-09-10T00:09:06.510Z Record version: sha256:f1b65677e52b7b7584878a16ee456729c743d039af5aafd4910e14061d63b52d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If an exploratory well or exploratory-type stratigraphic test well is in progress at the end of a period and the well is determined not to have found proved reserves before the financial statements for that period are issued or are available to be issued (as discussed in Section 855-10-25), the costs incurred through the end of the period, net of any salvage value, shall be charged to expense for that period. Previously issued financial statements shall not be retroactively restated.