{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/835/932/#25-recognition","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.","topic":"835","topic_title":"Interest","subtopic":"835-932","subtopic_title":"Extractive Activities—Oil and Gas","section":{"number":"25","label":"25 Recognition","anchor":"25-recognition","is_sec":false,"groups":[{"block":null,"heading":"Assets Qualifying for Interest Capitalization","paragraphs":[{"citation":"835-932-25-1","para":"25-1","html":"For purposes of applying interest capitalization (see Subtopic 835-20) to oil- and gas-producing operations accounted for by the full cost method, assets whose costs are being currently depreciated, depleted, or amortized are assets in use in the earning activities of the entity and are not assets qualifying for capitalization of interest cost as defined in paragraph 835-20-15-5. Unusually significant investments in unproved properties and major development projects that are not being currently depreciated, depleted, or amortized and on which exploration or development activities are in progress are assets qualifying for capitalization of interest cost. Similarly, in a cost center with no production, significant properties and projects on which exploration or development activities are in progress are assets qualifying for capitalization of interest cost. In certain transactions, pipeline entities make advances to encourage exploration. These advances are satisfied by delivery of future production, but there is also a definite obligation to repay if the future production is insufficient to discharge the obligation by a definite date. The advance is covered by the exclusion in paragraph 835-30-15-3(b) even though there may be an obligation to repay should the future production prove insufficient to discharge the obligation. However, if the advance is in a contract with a customer within the scope of Topic 606 on revenue from contracts with customers, the guidance in Topic 606shall be applied.