Applying FASB Statement No. 34 to Oil and Gas Producing Operations Accounted for by the Full Cost Method—an interpretation of FASB Statement No. 34
FASB Statement No. 34, Capitalization of Interest Cost, establishes standards for capitalizing interest cost as part of the historical cost of acquiring certain assets. This Interpretation clarifies that the assets of an oil and gas producing operation accounted for by the full cost method that qualify for capitalization of interest are:
- Those unusually significant investments in unproved properties and major development projects that are not being depreciated, depleted, or amortized currently and
- Significant properties and projects in cost centers with no production,
provided that exploration or development activities on such assets are in progress.