# ASC 360-932-55: Property, Plant, and Equipment — Extractive Activities—Oil and Gas — 55 Implementation Guidance and Illustrations Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/360/932/#55-implementation-guidance-and-illustrations) 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): 2026-09-10T00:09:10.557Z to 2026-09-10T00:09:10.557Z Record version: sha256:572571d5938cd6d25d24cf2a788a68def1a0691bc26ec928ba6a2c34ea22980d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 360-932-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/360/932/#55-implementation-guidance-and-illustrations) SEC content: no #### Implementation Guidance ##### [360-932-55-1](https://asc.understandingaccounting.org/asc/360/932/#360-932-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:09:10.557Z to 2026-09-10T00:09:10.557Z Record version: sha256:c9103c00fb9f45aa2849932942e5f770ffed92906f21c73a455387dd67542055 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In accordance with paragraphs [932-360-40-4 through 40-9](https://asc.understandingaccounting.org/asc/360/932/#360-932-40-4) , the following types of transactions shall be accounted for as indicated in each Example. No attempt has been made to include the many variations of those arrangements that occur, but those paragraphs shall, where applicable, determine the accounting for those other arrangements as well. ##### [360-932-55-2](https://asc.understandingaccounting.org/asc/360/932/#360-932-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:09:10.557Z to 2026-09-10T00:09:10.557Z Record version: sha256:d8ee4a63805c6e8558f38eb07c15f6318ac3286fd8b413bc965f9e1b0ef11af7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Some [production](https://asc.understandingaccounting.org/glossary/p/#production "Production involves lifting the crude oil and natural gas to the surface, extracting saleable hydrocarbons, in the solid, liquid, or gaseous state from oil sands, shale, coalbeds, or other nonrenewable natural resources that are intended to be upgraded into synthetic oil or gas, gathering, treating, field processing (as in the case of processing gas to extract liquid hydrocarbons), and field storage. The oil and gas production function shall be regarded as ending at a terminal point, which is the outlet valve on the lease or field storage tank. If unusual physical or operational circumstances exist, it may be appropriate to regard the terminal point for the production function as: The first point at which oil, gas, or gas liquids, natural or synthetic, are delivered to a main pipeline, a common carrier, a refinery, or a marine terminal In the case of natural resources that are intended to be upgraded into synthetic oil or gas, if those natural resources are delivered to a purchaser before upgrading, the first point at which the natural resources are delivered to a main pipeline, a common carrier, a refinery, a marine terminal, or a facility that upgrades such natural resources into synthetic oil or gas.") payments differ from those described in paragraph [932-470-25-1](https://asc.understandingaccounting.org/asc/470/932/#470-932-25-1) in that the seller's obligation is not expressed in monetary terms but as an obligation to deliver, free and clear of all expenses associated with operation of the property, a specified quantity of oil or gas to the purchaser out of a specified share of future production. Such a transaction is a sale of a mineral interest for which gain shall not be recognized because the seller has a substantial obligation for future performance. The seller shall account for the funds received as unearned revenue to be recognized as the oil or gas is delivered. The purchaser of such a production payment has acquired an interest in a mineral property that shall be recorded at cost and amortized by the unit-of-production method as delivery takes place. The related reserve estimates and production data shall be reported as those of the purchaser of the production payment and not of the seller (see paragraphs [932-235-50-4 through 50-11](https://asc.understandingaccounting.org/asc/235/932/#235-932-50-4) ). ##### [360-932-55-3](https://asc.understandingaccounting.org/asc/360/932/#360-932-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:09:10.557Z to 2026-09-10T00:09:10.557Z Record version: sha256:39e897fccaf9ae3b0af5429e85118002288cb0b57187d0c2f66c224c839991f9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An assignment of the operating interest in an unproved property with retention of a nonoperating interest in return for drilling, development, and operation by the assignee is a pooling of assets in a joint undertaking for which the assignor shall not recognize gain or loss. The assignor's cost of the original interest shall become the cost of the interest retained. The assignee shall account for all costs incurred as specified by Sections 932-360-25 and 932-360-35 and shall allocate none of those costs to the mineral interest acquired. If oil or gas is discovered, each party shall report its share of reserves and production (see paragraphs [932-235-50-4 through 50-11](https://asc.understandingaccounting.org/asc/235/932/#235-932-50-4) ). ##### [360-932-55-4](https://asc.understandingaccounting.org/asc/360/932/#360-932-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:09:10.557Z to 2026-09-10T00:09:10.557Z Record version: sha256:25f24595715134c114e4b7da5ba05badcad8b8abf6888c40a667b963794f0fec Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An assignment of a part of an operating interest in an [unproved property](https://asc.understandingaccounting.org/glossary/u/#unproved-properties "Unproved properties are properties with no proved reserves.") in exchange for a free well with provision for joint ownership and operation is a pooling of assets in a joint undertaking by the parties. The assignor shall record no cost for the obligatory well; the assignee shall record no cost for the mineral interest acquired. All drilling, development, and operating costs incurred by either party shall be accounted for as specified by this Topic. If the conveyance agreement requires the assignee to incur geological or geophysical expenditures instead of, or in addition to, a drilling obligation, those costs shall likewise be accounted for by the assignee as specified by this Topic. If reserves are discovered, each party shall report its share of reserves and production (see paragraphs [932-235-50-4 through 50-11](https://asc.understandingaccounting.org/asc/235/932/#235-932-50-4) ). ##### [360-932-55-5](https://asc.understandingaccounting.org/asc/360/932/#360-932-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:09:10.557Z to 2026-09-10T00:09:10.557Z Record version: sha256:7b29971a6ac53801dc42eafc011142d3bec332ec3c019a854056ac99b9fbad8e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A part of an operating interest in an unproved property may be assigned to effect an arrangement called a carried interest whereby the assignee (the carrying party) agrees to defray all costs of drilling, developing, and operating the property and is entitled to all of the revenue from production from the property, excluding any third party interest, until all of the assignee's costs have been recovered, after which the assignor will share in both costs and production. Such an arrangement represents a pooling of assets in a joint undertaking by the assignor and assignee. The carried party shall make no accounting for any costs and revenue until after recoupment (payout) of the carried costs by the carrying party. Subsequent to payout the carried party shall account for its share of revenue, operating expenses, and (if the agreement provides for subsequent sharing of costs rather than a carried interest) subsequent development costs. During the payout period the carrying party shall record all costs, including those carried, as specified by this Topic and shall record all revenue from the property including that applicable to the recovery of costs carried. The carried party shall report as oil or gas reserves only its share of proved reserves estimated to remain after payout, and unit-of-production amortization of the carried party's property cost shall not commence prior to payout. Prior to payout the carrying party's reserve estimates and production data shall include the quantities applicable to recoupment of the carried costs (see paragraphs [932-235-50-4 through 50-11](https://asc.understandingaccounting.org/asc/235/932/#235-932-50-4) ). ##### [360-932-55-6](https://asc.understandingaccounting.org/asc/360/932/#360-932-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:09:10.557Z to 2026-09-10T00:09:10.557Z Record version: sha256:0acc18b4b26d4bbf8425688246c6fcf8a1431e45665da21bf8495dc1593a23ea Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A part of an operating interest owned may be exchanged for a part of an operating interest owned by another party. The purpose of such an arrangement, commonly called a joint venture in the oil and gas industry, often is to avoid duplication of facilities, diversify risks, and achieve operating efficiencies. No gain or loss shall be recognized by either party at the time of the transaction. In some joint ventures that may or may not involve an exchange of interests, the parties may share different elements of costs in different proportions. In such an arrangement a party may acquire an interest in a property or in wells and related equipment that is disproportionate to the share of costs borne by it. As in the case of a carried interest or a free well, each party shall account for its own cost under the provisions of this Subtopic. No gain shall be recognized for the acquisition of an interest in joint assets, the cost of which may have been paid in whole or in part by another party. ##### [360-932-55-7](https://asc.understandingaccounting.org/asc/360/932/#360-932-55-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:09:10.557Z to 2026-09-10T00:09:10.557Z Record version: sha256:3120484b12293611e0fe830cd4ba965daf6059448604f059f226c1e5dbf9fe2a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In a unitization all the operating and nonoperating participants pool their assets in a producing area (normally a [field](https://asc.understandingaccounting.org/glossary/f/#field "A field is an area consisting of a single reservoir or multiple reservoirs all grouped on or related to the same individual geological structural feature and/or stratigraphic condition. There may be two or more reservoirs in a field which are separated vertically by intervening impervious strata, or laterally by local geologic barriers, or by both. Reservoirs that are associated by being in overlapping or adjacent fields may be treated as a single or common operational field. The geological terms structural feature and stratigraphic condition are intended to identify localized geological features as opposed to the broader terms of basins, trends, provinces, plays, areas-of-interest, and so forth.")) to form a single unit and in return receive an undivided interest (of the same type as previously held) in that unit. Unitizations generally are undertaken to obtain operating efficiencies and to enhance recovery of reserves, often through improved recovery operations. Participation in the unit is generally proportionate to the oil and gas reserves contributed by each. Because the [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.") may be in different stages of development at the time of unitization, some participants may pay cash and others may receive cash to equalize contributions of [wells and related equipment and facilities](https://asc.understandingaccounting.org/glossary/w/#wells-and-related-equipment-and-facilities "Wells and related equipment and facilities are often referred to in the oil and gas industry as lease and well equipment even though, technically, the property may have been acquired other than by a lease. The costs include those incurred to: Drill and equip those exploratory wells and exploratory-type stratigraphic test wells that have found proved reserves Obtain access to proved reserves and provide facilities for extracting, treating, gathering, and storing the oil and gas, including the drilling and equipping of development wells and development-type stratigraphic test wells (whether those wells are successful or unsuccessful) and service wells.") with the ownership interests in reserves. In those circumstances, cash paid by a participant shall be recorded as an additional investment in wells and related equipment and facilities, and cash received by a participant shall be recorded as a recovery of cost. The cost of the assets contributed plus or minus cash paid or received is the cost of the participant's undivided interest in the assets of the unit. Each participant shall include its interest in reporting reserve estimates and production data (see paragraphs [932-235-50-4 through 50-11)](https://asc.understandingaccounting.org/asc/235/932/#235-932-50-4). ##### [360-932-55-8](https://asc.understandingaccounting.org/asc/360/932/#360-932-55-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:09:10.557Z to 2026-09-10T00:09:10.557Z Record version: sha256:9ab223909dddf08cf28b6512ade173f0c4c18b0bd9acd8a49764fc68e1d53120 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the entire interest in an unproved property is sold for cash or cash equivalent, recognition of gain or loss depends on whether, in applying paragraph [932-360-35-11](https://asc.understandingaccounting.org/asc/360/932/#360-932-35-11), impairment had been assessed for that property individually or by amortizing that property as part of a group. If impairment was assessed individually, gain or loss shall be recognized. For a property amortized by providing a valuation allowance on a group basis, neither gain nor loss shall be recognized when an unproved property is sold unless the sales price exceeds the original cost of the property, in which case gain shall be recognized in the amount of such excess. ##### [360-932-55-9](https://asc.understandingaccounting.org/asc/360/932/#360-932-55-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:09:10.557Z to 2026-09-10T00:09:10.557Z Record version: sha256:00f5958d484ca2ec6d4d0ed953ffb5d98ab4eaccd6dc0c1a106b3d8fb3324b30 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a part of the interest in an unproved property is sold, even though for cash or cash equivalent, substantial uncertainty usually exists as to recovery of the cost applicable to the interest retained. Consequently, the amount received shall be treated as a recovery of cost. The carrying amount of the interest retained shall continue to be subject to the assessment for impairment as required by paragraph [932-360-35-11](https://asc.understandingaccounting.org/asc/360/932/#360-932-35-11). However, if the sales price exceeds the carrying amount of a property whose impairment has been assessed individually in accordance with that paragraph, or exceeds the original cost of a property amortized by providing a valuation allowance on a group basis, gain shall be recognized in the amount of such excess. ##### [360-932-55-10](https://asc.understandingaccounting.org/asc/360/932/#360-932-55-10) Pending content: no Source downloaded (UTC): 2026-09-10T00:09:10.557Z to 2026-09-10T00:09:10.557Z Record version: sha256:ef9a0ad0bc94dd8b863745498229be24ca34b50b112eef40eddb0f791f4c7af0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The sale of an entire interest in a proved property that constitutes a separate amortization base is not one of the types of conveyances described in paragraphs [932-360-40-7 through 40-8](https://asc.understandingaccounting.org/asc/360/932/#360-932-40-7) . The difference between the amount of sales proceeds and the unamortized cost shall be recognized as a gain or loss. ##### [360-932-55-11](https://asc.understandingaccounting.org/asc/360/932/#360-932-55-11) Pending content: no Source downloaded (UTC): 2026-09-10T00:09:10.557Z to 2026-09-10T00:09:10.557Z Record version: sha256:e25898c7c4ab5ed9376ebf3db1abefd8c443c3b46e717ecbb9dbf43bff36d4ca Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The sale of a part of a proved property, or of an entire proved property constituting a part of an amortization base, shall be accounted for as the sale of an asset, and a gain or loss shall be recognized, since it is not one of the conveyances described in paragraphs [932-360-40-7 through 40-8](https://asc.understandingaccounting.org/asc/360/932/#360-932-40-7) . The unamortized cost of the property or group of properties a part of which was sold shall be apportioned to the interest sold and the interest retained on the basis of the fair values of those interests. However, the sale may be accounted for as a normal retirement under the provisions of paragraph [932-360-40-3](https://asc.understandingaccounting.org/asc/360/932/#360-932-40-3) with no gain or loss recognized if doing so does not significantly affect the unit-of-production amortization rate. ##### [360-932-55-12](https://asc.understandingaccounting.org/asc/360/932/#360-932-55-12) Pending content: no Source downloaded (UTC): 2026-09-10T00:09:10.557Z to 2026-09-10T00:09:10.557Z Record version: sha256:4db2b4233a4a7b69a1bcb8745dd24c76c79a3061198f3c900fa5a2e4d0d326e7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The sale of the operating interest in a proved property for cash with retention of a nonoperating interest is not one of the types of conveyances described in paragraphs [932-360-40-7 through 40-8](https://asc.understandingaccounting.org/asc/360/932/#360-932-40-7) . Accordingly, it shall be accounted for as the sale of an asset, and any gain or loss shall be recognized. The seller shall allocate the cost of the proved property to the operating interest sold and the nonoperating interest retained on the basis of the fair values of those interests. A retained production payment denominated in money is not a mineral interest (see paragraphs [932-360-25-4](https://asc.understandingaccounting.org/asc/360/932/#360-932-25-4) and [932-470-25-1](https://asc.understandingaccounting.org/asc/470/932/#470-932-25-1)). ##### [360-932-55-13](https://asc.understandingaccounting.org/asc/360/932/#360-932-55-13) Pending content: no Source downloaded (UTC): 2026-09-10T00:09:10.557Z to 2026-09-10T00:09:10.557Z Record version: sha256:0342787ec65f9bd523e9070bea731881a03dd2d0ea25826e533f1be07fbf48ba Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The sale of a proved property subject to a retained production payment that is expressed as a fixed sum of money payable only from a specified share of production from that property, with the purchaser of the property obligated to incur the future costs of operating the property, shall be accounted for as follows: 1. a If satisfaction of the retained production payment is reasonably assured, the seller of the property, who retained the production payment, shall record the transaction as a sale, with recognition of any resulting gain or loss. The retained production payment shall be recorded as a receivable, with interest accounted for in accordance with the provisions of Subtopic 835-30. The purchaser shall record as the cost of the assets acquired the cash consideration paid plus the present value of the retained production payment, which shall be recorded as a payable. The oil and gas reserve estimates and production data, including those applicable to liquidation of the retained production payment, shall be reported by the purchaser of the property (see paragraphs [932-235-50-4 through 50-11](https://asc.understandingaccounting.org/asc/235/932/#235-932-50-4) ). 2. b If satisfaction of the retained production payment is not reasonably assured, the transaction is in substance a sale with retention of an overriding royalty that shall be accounted for in accordance with the preceding paragraph. ##### [360-932-55-14](https://asc.understandingaccounting.org/asc/360/932/#360-932-55-14) Pending content: no Source downloaded (UTC): 2026-09-10T00:09:10.557Z to 2026-09-10T00:09:10.557Z Record version: sha256:55f430488d217b384f9bde55618e72919f6028336de08632cd3ad91e6eb27dea Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The sale of a proved property subject to a retained production payment that is expressed as a right to a specified quantity of oil or gas out of a specified share of future production shall be accounted for in accordance with paragraph [932-360-55-12](https://asc.understandingaccounting.org/asc/360/932/#360-932-55-12). ##### [360-932-55-15](https://asc.understandingaccounting.org/asc/360/932/#360-932-55-15) Pending content: no Source downloaded (UTC): 2026-09-10T00:09:10.557Z to 2026-09-10T00:09:10.557Z Record version: sha256:7650bcff9ad68b7fcff91a5685e0901fe16fb93589cebc933fbd8c5c8a61d32b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraphs 932-360-55-15 through 55-19 superseded by Accounting Standards Update No. 2012-04](https://asc.understandingaccounting.org/asc/360/932/#360-932-55-15).