{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/470/932/","source":"FASB Accounting Standards Codification, Basic View","usage":"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.","number":"470-932","topic":"470","title":"Extractive Activities—Oil and Gas","area":"Liabilities","paragraphs":4,"summary":"This Subtopic governs how oil and gas entities account for certain \"conveyance\" transactions that are, in substance, borrowings repayable in cash or its equivalent. Under 470-932-25-1, such arrangements must be recorded as a payable by the operator receiving the funds and a receivable by the party advancing the funds, rather than as a sale or conveyance of mineral interests.","concepts":["conveyance","production payment","in-substance borrowing","oil and gas properties","advance repayable in cash","receivable and payable recognition","substance over form"],"categories":["Recognition","Industry-specific","Debt and equity"],"level":"intermediate","topic_title":"Debt","sections":[{"number":"00","label":"00 Status","anchor":"00-status","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"470-932-00-1","para":"00-1","html":"<div class=\"asc-body\"><div class=\"norm-text\">The following table identifies the changes made to this Subtopic.</div><div class=\"norm-text\"><table class=\"asc-table\" id=\"SL6809313-166186\"><tr><td class=\"entry\"><strong class=\"ph b\">Paragraph</strong></td><td class=\"entry\"><strong class=\"ph b\">Action</strong></td><td class=\"entry\"><strong class=\"ph b\">Accounting Standards Update</strong></td><td class=\"entry\"><strong class=\"ph b\">Date</strong></td></tr><tr><td class=\"entry\"></td><td class=\"entry\"></td><td class=\"entry\"></td><td class=\"entry\"></td></tr><tr><td class=\"entry\"><a href=\"/glossary/p/#production\" class=\"term\" title=\"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.\"><span>Production</span></a></td><td class=\"entry\">Amended</td><td class=\"entry\"><a href=\"/updates/asu-2010-03/\" class=\"xref\">Accounting Standards Update No. 2010-03</a></td><td class=\"entry\">01/06/2010</td></tr></table></div></div>","snippet":"The following table identifies the changes made to this Subtopic.\nParagraph | Action | Accounting Standards Update | Date |\n| | | |\nProduction | Amended | Accounting Standards Update No. 2010-03 | 01/06/2010 |","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d1c656e24d0d03e7abfcc6b47f50afa318a070a55de31e4b822ab6544d380d8f","downloaded_from":"2026-09-10T00:33:36.319Z","last_downloaded_at":"2026-09-10T00:33:36.319Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval 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entities in the oil and gas industry.</div></div>","snippet":"This Subtopic addresses accounting for debt by entities in the oil and gas industry.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b18c14b592af240c0eaa5c752d2734a074c2b95db82a827af6dc628261391c34","downloaded_from":"2026-09-10T00:33:39.838Z","last_downloaded_at":"2026-09-10T00:33:39.838Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval 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same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section <a altsource=\"GUID-DBC21369-4585-4B41-8260-206E58C04720.ditamap\" class=\"ditamap\">932-10-15</a>.</div></div>","snippet":"This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 932-10-15.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1a813022d26a33c6bc37f02b5d9240651c5b1eb1f28843aeae1f61ca113477df","downloaded_from":"2026-09-10T00:33:42.223Z","last_downloaded_at":"2026-09-10T00:33:42.223Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478768","source_sha256":"413fcf2b4e8f3750b57897d922cd720f87f181ed4a12e0cb8ff4e4621944e481"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:fbc9a8f4c1637b48f4670eacb8aa1289fcba56568abc45f26cec040da86f15d2","downloaded_from":"2026-09-10T00:33:42.223Z","last_downloaded_at":"2026-09-10T00:33:42.223Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval 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id=\"sfr_EAC1789E-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Certain transactions, sometimes referred to as conveyances, are in substance borrowings repayable in cash or its equivalent and shall be accounted for as borrowings. Both of the following are examples of such transactions: </span></span><ol class=\"ol-norm\"><li class=\"li-norm\"><span class=\"linum\">a</span><div class=\"p\"><span class=\"sfragment\" id=\"sfr_EAC179BB-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Entities seeking supplies of oil or gas sometimes make cash advances to operators to finance <a href=\"/glossary/e/#exploration\" class=\"term\" title=\"Exploration involves both of the following: Identifying areas that may warrant examination Examining specific areas that are considered to have prospects of containing oil and gas reserves, including drilling exploratory wells and exploratory-type stratigraphic test wells.\"><span>exploration</span></a> in return for the right to purchase oil or gas discovered. Funds advanced for exploration that are repayable by offset against purchases of oil or gas discovered, or in cash if insufficient oil or gas is produced by a specified date, shall be accounted for as a receivable by the lender and as a payable by the operator. </span></span></div></li><li class=\"li-norm\"><span class=\"linum\">b</span><div class=\"p\"><span class=\"sfragment\" id=\"sfr_EAC17A9D-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Funds advanced to an operator that are repayable in cash out of the proceeds from a specified share of future <a href=\"/glossary/p/#production\" class=\"term\" title=\"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.\"><span>production</span></a> of a producing property, until the amount advanced plus interest at a specified or determinable rate is paid in full, shall be accounted for as a borrowing. The advance is a payable for the recipient of the cash and a receivable for the party making the advance. Such transactions, as well as those described in paragraph <a href=\"/asc/360/932/#360-932-55-2\" class=\"xref\">932-360-55-2</a>, are commonly referred to as production payments. The two types differ in substance, however, as explained in that paragraph. </span></span></div></li></ol></div></div>","snippet":"Certain transactions, sometimes referred to as conveyances, are in substance borrowings repayable in cash or its equivalent and shall be accounted for as borrowings. Both of the following are examples of such transaction…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9773ac9066bb0ea01514cce235334046899c1d842b03198f5f9b8b280b68248d","downloaded_from":"2026-09-10T00:33:48.351Z","last_downloaded_at":"2026-09-10T00:33:48.351Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477224","source_sha256":"c6b2199b03e52709539d139ccb62517cc0b9fce04cde6b04ea9f7b8df17778a7"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:655223ac44398d62125a8a2d48d6ffe81624ae9d39025f71c09230dedabd5a13","downloaded_from":"2026-09-10T00:33:48.351Z","last_downloaded_at":"2026-09-10T00:33:48.351Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477224","source_sha256":"c6b2199b03e52709539d139ccb62517cc0b9fce04cde6b04ea9f7b8df17778a7"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4498077b03737279e081575b3026dae13eeae5b06d013ff0daba473399de0ea0","downloaded_from":"2026-09-10T00:33:48.351Z","last_downloaded_at":"2026-09-10T00:33:48.351Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477224","source_sha256":"c6b2199b03e52709539d139ccb62517cc0b9fce04cde6b04ea9f7b8df17778a7"}}],"enrichment":{"summary":"This Subtopic governs how oil and gas entities account for certain \"conveyance\" transactions that are, in substance, borrowings repayable in cash or its equivalent. Under 470-932-25-1, such arrangements must be recorded as a payable by the operator receiving the funds and a receivable by the party advancing the funds, rather than as a sale or conveyance of mineral interests.","key_points":["Transactions labeled conveyances that are in substance borrowings repayable in cash or its equivalent shall be accounted for as borrowings (470-932-25-1).","Cash advanced to an operator to finance exploration, repayable by offset against purchases of oil or gas discovered or in cash if insufficient production occurs by a specified date, is a receivable to the lender and a payable to the operator (470-932-25-1(a)).","Funds advanced repayable in cash out of proceeds from a specified share of future production until the advance plus interest at a specified or determinable rate is repaid are accounted for as a borrowing (470-932-25-1(b)).","Both arrangements are commonly called production payments, but they differ in substance from the production payments described in 932-360-55-2, which are not borrowings (470-932-25-1(b)).","The Subtopic's scope follows the Overall oil and gas Subtopic scope in Section 932-10-15 (470-932-15-1)."],"categories":["Recognition","Industry-specific","Debt and equity"],"audience_level":"intermediate","student_note":"The classic trap is treating every \"production payment\" alike: if the advance must be repaid in cash (with interest) out of future production proceeds, it is debt, not a sale of a mineral interest. Compare it against the conveyance-type production payment in 932-360-55-2 to see the substance-over-form distinction.","related_topics":["932-10","932-360","932-235","470-10","835-30"],"key_concepts":["conveyance","production payment","in-substance borrowing","oil and gas properties","advance repayable in cash","receivable and payable recognition","substance over form"],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:cf825fb72192caa2f762600cd1523a5fe62d02e46ee1db2503e4d6afa8743dc4","downloaded_from":"2026-09-10T00:33:36.319Z","last_downloaded_at":"2026-09-10T00:33:48.351Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"related":[{"number":"835-932","title":"Extractive Activities—Oil and Gas","topic_title":"Interest","score":0.7947,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:abfd08cd0a3abd81a7f7771d29d33b14df8a2aff5f75ad0d8b7a587ef8b219f0","downloaded_from":"2026-09-10T01:50:54.044Z","last_downloaded_at":"2026-09-10T01:51:06.744Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"720-932","title":"Extractive Activities—Oil and Gas","topic_title":"Other Expenses","score":0.7467,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:79a6dfb7a26802433d0cf277e710bb090a70a31467304af92f22fa2783202677","downloaded_from":"2026-09-10T01:10:32.559Z","last_downloaded_at":"2026-09-10T01:10:47.285Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"740-932","title":"Extractive Activities—Oil and Gas","topic_title":"Income Taxes","score":0.7234,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:eb274400436698512f21df10b01bd65057d575797187ee60ab98badac3543d32","downloaded_from":"2026-09-10T01:19:50.149Z","last_downloaded_at":"2026-09-10T01:20:10.076Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"810-932","title":"Extractive Activities—Oil and Gas","topic_title":"Consolidation","score":0.7073,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e204649faa0b4395d7f78666628dc1baf5e564f4ead460065e806bb7a3023c2a","downloaded_from":"2026-09-10T01:31:06.373Z","last_downloaded_at":"2026-09-10T01:31:16.096Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"330-932","title":"Extractive Activities—Oil and Gas","topic_title":"Inventory","score":0.7045,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a41f60a5848ba6de69572686f9d2d667df903e6fe9bf78d5562ebe21e6f01280","downloaded_from":"2026-09-09T23:53:09.584Z","last_downloaded_at":"2026-09-09T23:53:22.955Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"350-932","title":"Extractive Activities—Oil and Gas","topic_title":"Intangibles—Goodwill and Other","score":0.702,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:166ded2be7e0bf723df98c4977f405a6a581c380594ad5f7cc384040f0187cfe","downloaded_from":"2026-09-10T00:04:39.480Z","last_downloaded_at":"2026-09-10T00:04:44.333Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}}],"prev":{"number":"470-60","title":"Troubled Debt Restructurings by Debtors","topic_title":"Debt","provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:38844c804432e05a975c7e88aa535e720bb2f95a30624070639345f68bdc5cb6","downloaded_from":"2026-09-10T00:33:11.172Z","last_downloaded_at":"2026-09-10T00:33:34.628Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by 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