# ASC 470-932: Debt — Extractive Activities—Oil and Gas Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/470/932/) 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): 2026-09-10T00:33:36.319Z to 2026-09-10T00:33:48.351Z Record version: sha256:ee2f970fcdc55b0fb694a66665961b9ecec88acf0688e953dc9420edebfff34a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-932: Debt — Extractive Activities—Oil and Gas ### Machine-generated study aids ```json { "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" ] } ``` Source downloaded (UTC): 2026-09-10T00:33:36.319Z to 2026-09-10T00:33:36.319Z Record version: sha256:eb975aecf4423c15d6714b754cdfbaad532fd1e16cd1593aac2760932dd9b6d5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-932-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/470/932/#00-status) SEC content: no ##### [470-932-00-1](https://asc.understandingaccounting.org/asc/470/932/#470-932-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:36.319Z to 2026-09-10T00:33:36.319Z Record version: sha256:d1c656e24d0d03e7abfcc6b47f50afa318a070a55de31e4b822ab6544d380d8f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
ProductionAmendedAccounting Standards Update No. 2010-0301/06/2010
Source downloaded (UTC): 2026-09-10T00:33:39.838Z to 2026-09-10T00:33:39.838Z Record version: sha256:4a9c618c56a86bcb3fb6c163cbcec605e16bd5ef80ef52f8e9857b072c01678c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-932-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/470/932/#05-overview-and-background) SEC content: no ##### [470-932-05-1](https://asc.understandingaccounting.org/asc/470/932/#470-932-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:39.838Z to 2026-09-10T00:33:39.838Z Record version: sha256:b18c14b592af240c0eaa5c752d2734a074c2b95db82a827af6dc628261391c34 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic addresses accounting for debt by entities in the oil and gas industry. Source downloaded (UTC): 2026-09-10T00:33:42.223Z to 2026-09-10T00:33:42.223Z Record version: sha256:23c1a66e2a42bf4de774431bde28689f45f0cb45fd0c826a6332e174b14978b2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-932-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/470/932/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [470-932-15-1](https://asc.understandingaccounting.org/asc/470/932/#470-932-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:42.223Z to 2026-09-10T00:33:42.223Z Record version: sha256:1a813022d26a33c6bc37f02b5d9240651c5b1eb1f28843aeae1f61ca113477df Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 932-10-15. Source downloaded (UTC): 2026-09-10T00:33:48.351Z to 2026-09-10T00:33:48.351Z Record version: sha256:4498077b03737279e081575b3026dae13eeae5b06d013ff0daba473399de0ea0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-932-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/470/932/#25-recognition) SEC content: no ##### [470-932-25-1](https://asc.understandingaccounting.org/asc/470/932/#470-932-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:48.351Z to 2026-09-10T00:33:48.351Z Record version: sha256:9773ac9066bb0ea01514cce235334046899c1d842b03198f5f9b8b280b68248d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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: 1. a Entities seeking supplies of oil or gas sometimes make cash advances to operators to finance [exploration](https://asc.understandingaccounting.org/glossary/e/#exploration "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.") 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. 2. b Funds advanced to an operator that are repayable in cash out of the proceeds from a specified share of future [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.") 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 [932-360-55-2](https://asc.understandingaccounting.org/asc/360/932/#360-932-55-2), are commonly referred to as production payments. The two types differ in substance, however, as explained in that paragraph.