ASC

ASC 810-932

Extractive Activities—Oil and Gas

810 Consolidation

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In brief

IntermediateConsolidationPresentationIndustry-specificFinancial statement presentation

This Subtopic permits proportionate consolidation (a proportionate gross presentation of assets, liabilities, revenues, and expenses) for oil and gas ventures, an exception to the general rule that equity method investments in unincorporated entities are presented on a one-line basis. It applies only where proportionate consolidation is established industry practice, and the oil and gas industry is such an industry.

Key points (6)
  • Proportionate consolidation is allowed in industries where it has been industry practice, and the oil and gas industry is one such industry (810-932-05-1).
  • The scope follows Section 932-10-15, the Overall Extractive Activities—Oil and Gas Subtopic scope (810-932-15-1).
  • Under paragraph 810-10-45-14, proportionate gross financial statement presentation is not appropriate for an investment in an unincorporated legal entity accounted for by the equity method unless the investee is in the construction industry or an extractive industry (810-932-45-1).
  • An entity qualifies as being in an extractive industry only if its activities are limited to the extraction of mineral resources, such as oil and gas exploration and production (810-932-45-1).
  • Activities such as refining, marketing, or transporting extracted mineral resources disqualify an entity from the extractive-industry exception (810-932-45-1).
  • A parallel exception for mining entities is found in paragraph 930-810-45-1 (810-932-45-1).

For students. This is a narrow, exam-friendly exception: proportionate consolidation is generally prohibited, but oil and gas (and construction and mining) ventures may use it. The common mistake is applying the exception to an integrated energy company—the exception is lost once the entity refines, markets, or transports the extracted resources.

proportionate consolidationequity method investmentunincorporated legal entityextractive industryoil and gas exploration and productiongross financial statement presentationundivided interest

Machine-generated study aid for ASC 810-932. Check the source paragraphs below.

810-932-00Status

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810-932-00-1
The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
ProductionAmendedAccounting Standards Update No. 2010-0301/06/2010

810-932-05Overview and Background

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810-932-05-1
This Subtopic addresses proportionate consolidation, which is allowed in industries in which it has been industry practice. The oil and gas industry is one of the industries in which this is an allowed practice.

810-932-15Scope and Scope Exceptions

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Overall Guidance

810-932-15-1
This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 932-10-15.

810-932-45Other Presentation Matters

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Proportionate Consolidation

810-932-45-1
Paragraph 810-10-45-14 explains that a proportionate gross financial statement presentation is not appropriate for an investment in an unincorporated legal entity accounted for by the equity method of accounting unless the investee is in either the construction industry or an extractive industry (as discussed in this Topic and paragraph 930-810-45-1). As indicated in that paragraph, an entity is in an extractive industry only if its activities are limited to the extraction of mineral resources (such as oil and gas exploration and production) and not if its activities involve related activities such as refining, marketing, or transporting extracted mineral resources.

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