# ASC 740-932: Income Taxes — Extractive Activities—Oil and Gas Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/740/932/) 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): 2026-09-10T01:19:50.149Z to 2026-09-10T01:20:10.076Z Record version: sha256:c7384fad1ace2c80e494d02b14cb2bef4654db5d6738abe3bbc16f5c97c9ebab Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 740-932: Income Taxes — Extractive Activities—Oil and Gas ### Machine-generated study aids ```json { "summary": "This subtopic covers income tax accounting peculiar to oil- and gas-producing activities. Its core rules: the tax benefit of statutory depletion in excess of cost depletion is recognized only in the period the excess is deducted on the tax return (no deferred tax asset before then), and the likelihood that future statutory depletion will reduce or eliminate future taxable income must be weighed in the more-likely-than-not realizability assessment for deferred tax assets. It also notes that costs such as intangible drilling and development costs and geological and geophysical costs are deducted for tax purposes in periods different from when they are expensed or amortized for book purposes, creating temporary differences.", "key_points": [ "The scope follows the Overall Subtopic for extractive activities—oil and gas (740-932-15-1, referencing 932-10-15).", "The tax benefit of the excess of statutory (percentage) depletion over cost depletion shall be recognized in the period in which the excess is deducted for income tax purposes (740-932-25-1).", "In applying comprehensive interperiod income tax allocation, the possibility that future statutory depletion will reduce or eliminate future taxable income must be considered in judging whether it is more likely than not that deferred tax asset benefits will not be realized (740-932-30-1).", "Intangible drilling and development costs are deducted for tax when incurred but capitalized and amortized for book purposes for successful exploratory wells and all development wells, creating temporary differences (740-932-45-1).", "Some geological and geophysical costs are expensed as incurred for book purposes but deferred and deducted in later periods for tax purposes (740-932-45-1).", "Disclosure requirements for oil and gas income taxes are located at paragraph 932-235-50-25 (740-932-50-1)." ], "categories": [ "Income taxes", "Industry-specific", "Recognition", "Disclosure" ], "audience_level": "advanced", "student_note": "Exam trap: statutory (percentage) depletion in excess of cost depletion is a permanent-type benefit recognized only when deducted on the return—students often try to set up a deferred tax asset for it. Remember too that expected future statutory depletion cuts future taxable income and therefore weakens the case for realizing existing deferred tax assets (valuation allowance analysis).", "related_topics": [ "740-10", "932-10", "932-235", "932-360", "740-270" ], "key_concepts": [ "statutory depletion", "cost depletion", "intangible drilling and development costs", "geological and geophysical costs", "deferred tax asset realizability", "more likely than not", "interperiod tax allocation", "temporary differences" ] } ``` Source downloaded (UTC): 2026-09-10T01:19:50.149Z to 2026-09-10T01:19:50.149Z Record version: sha256:2b8299db25e8a27e66abfc7e92ff982c77a5e595fe6f0680d7e77c6ec5b934ee Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 740-932-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/740/932/#00-status) SEC content: no ##### [740-932-00-1](https://asc.understandingaccounting.org/asc/740/932/#740-932-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:19:50.149Z to 2026-09-10T01:19:50.149Z Record version: sha256:3a9245b0743ffda0f05f262afdf55d4f9b1ca1636ec1014ef2b9e3d3e8935162 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
Exploratory WellAmendedAccounting Standards Update No. 2010-0301/06/2010
Source downloaded (UTC): 2026-09-10T01:19:53.173Z to 2026-09-10T01:19:53.173Z Record version: sha256:4f21a58d11888cd79437373916df4234f9ec3860cf71c1a00fa2409b72b7899f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 740-932-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/740/932/#05-overview-and-background) SEC content: no ##### [740-932-05-1](https://asc.understandingaccounting.org/asc/740/932/#740-932-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:19:53.173Z to 2026-09-10T01:19:53.173Z Record version: sha256:d899365cb3e5d0bfdaf02f251fa830e3ca823ef2f17a053c8ce2fdf40b762850 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic addresses the accounting for taxes specific to the oil and gas industry, for example, statutory tax depletion. Source downloaded (UTC): 2026-09-10T01:19:56.523Z to 2026-09-10T01:19:56.523Z Record version: sha256:c04e8495b38185d6277671d12be72c4ee555cc18cf5a0981135961e8cc29ec60 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 740-932-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/740/932/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [740-932-15-1](https://asc.understandingaccounting.org/asc/740/932/#740-932-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:19:56.523Z to 2026-09-10T01:19:56.523Z Record version: sha256:173e1767b5c0328a9ebbe09e2601bc4e71ef2e1a1e362d8ff6ef5f43086f71ee 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): 2026-09-10T01:20:00.429Z to 2026-09-10T01:20:00.429Z Record version: sha256:537719dd465eefc1639ddbeb603de7372b639bced9fb4e33a34f3596ce517b81 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 740-932-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/740/932/#25-recognition) SEC content: no ##### [740-932-25-1](https://asc.understandingaccounting.org/asc/740/932/#740-932-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:20:00.429Z to 2026-09-10T01:20:00.429Z Record version: sha256:fb08dc19b207d2b932d6319552fffbefdf081e72ea85f53d9dbff37781b7373c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The tax benefit of the excess of statutory depletion over cost depletion for tax purposes shall be recognized in the period in which the excess is deducted for income tax purposes. Source downloaded (UTC): 2026-09-10T01:20:02.602Z to 2026-09-10T01:20:02.602Z Record version: sha256:329096ee3014c4f18f33273fa38b092a784e830d9372c2928092e3bfee304f48 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 740-932-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/740/932/#30-initial-measurement) SEC content: no ##### [740-932-30-1](https://asc.understandingaccounting.org/asc/740/932/#740-932-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:20:02.602Z to 2026-09-10T01:20:02.602Z Record version: sha256:079f0002f86c3fe1e081131d4470694140b3e70b40d380c3b3392c23f3141ddb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In applying the comprehensive interperiod income tax allocation provision, the possibility that statutory depletion in future periods will reduce or eliminate taxable income in future years shall be considered in determining whether it is more likely than not that the tax benefits of deferred tax assets will not be realized. Source downloaded (UTC): 2026-09-10T01:20:04.413Z to 2026-09-10T01:20:04.413Z Record version: sha256:69ea0a4a175e681b5072f36917c26be6ef025f811de87c50d60fb185e3e2244b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 740-932-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/740/932/#45-other-presentation-matters) SEC content: no ##### [740-932-45-1](https://asc.understandingaccounting.org/asc/740/932/#740-932-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:20:04.413Z to 2026-09-10T01:20:04.413Z Record version: sha256:b9a31e0756839db17c707c93ac7cae46617c9920b49a585159da86d64b71ce9c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Some costs incurred in an entity's oil- and gas- producing activities enter into the determination of taxable income and pretax accounting income in different periods. A principal example is intangible drilling and development costs, which are deductible in determining taxable income when incurred but which, for successful [exploratory wells](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.") and for all [development wells](https://asc.understandingaccounting.org/glossary/d/#development-well "A development well is a well drilled within the proved area of an oil or gas reservoir to the depth of a stratigraphic horizon known to be productive."), are capitalized and amortized for financial accounting purposes under the provisions of this Topic. As another example, some geological and geophysical costs, which are charged to expense when incurred under the provisions of this Topic, are deferred and deducted in subsequent periods for income tax purposes. Source downloaded (UTC): 2026-09-10T01:20:06.307Z to 2026-09-10T01:20:06.307Z Record version: sha256:91d7e905572d064d3a07e9a12e99e40ad9dc644bc6425f9c0b733f470592b6c3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 740-932-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/740/932/#50-disclosure) SEC content: no ##### [740-932-50-1](https://asc.understandingaccounting.org/asc/740/932/#740-932-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:20:06.307Z to 2026-09-10T01:20:06.307Z Record version: sha256:0022372f8adf59aacad5dd4917ef817e547b61506f56be6308e190a1a9be9a0f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [932-235-50-25](https://asc.understandingaccounting.org/asc/235/932/#235-932-50-25) for various disclosure requirements for oil and gas income taxes. Source downloaded (UTC): 2026-09-10T01:20:10.076Z to 2026-09-10T01:20:10.076Z Record version: sha256:6db9be479bb68ba5e68c093dfe337d7b4b7fa6903eec75d4e9fcbb36f98fbf33 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 740-932-S25: SEC 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/740/932/#sec-25-recognition) SEC content: yes ##### [740-932-S25-1](https://asc.understandingaccounting.org/asc/740/932/#740-932-S25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:20:10.076Z to 2026-09-10T01:20:10.076Z Record version: sha256:3b3689401a2c075e541f5004a068c651e3e6d6b9668d27c18642ce44ecf7f6f2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [932-10-S99-1](https://asc.understandingaccounting.org/asc/932/10/#932-10-S99-1), Regulation S-X Rule 4-10(d), for requirements pertaining to the interperiod tax allocation for intangible drilling and development costs that enter into the determination of taxable income and pretax accounting income in different periods.