full cost method

This subtopic applies the general interest capitalization rules of Subtopic 835-20 to oil- and gas-producing operations that use the full cost method. Costs already being depreciated, depleted, or amortized are treated as assets in use and do not qualify for interest capitalization, while unusually significant unproved properties and major development projects not yet being amortized and on which exploration or development is in progress do qualify. It also addresses pipeline advances made to encourage exploration, which fall within the imputation-of-interest exclusion in 835-30-15-3(b) unless the advance is in a Topic 606 contract with a customer.

ASC 932-10 is the Overall subtopic of the oil and gas extractive activities Topic; it identifies which entities and activities fall within the industry guidance and supplies common industry definitions. It applies to all entities with oil- and gas-producing activities — the search for, acquisition of rights to, and construction/drilling/production activities needed to bring crude oil, natural gas, and synthetic-oil-source hydrocarbons to the surface (932-10-15-2A). The industry-specific Subtopics override the more general Codification Topics for the issues they address (932-10-05-3), and the Topic does not prohibit use of the full-cost method (932-10-15-4).