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SEC issues new SABs.


The Securities and Exchange Commission has released Staff Accounting Bulletins nos. 85 and 86.

SAB no. 85 expresses the staff's views in relation to

* Use of the gross revenue method of amortizing capitalized costs of oil and gas properties by entities using the full-cost method of accounting.

* The inclusion of methane gas within the definition of proved oil and gas reserves.

According to the SEC staff, it may be more appropriate for registrants to compute amortization based on the gross revenue method when oil and gas sales prices are disproportionate to their relative energy content.

The staff also believes that methane gas should be included in proved reserves if the methane complies in all other respects with the SEC's definition of proved oil and gas reserves.

SAB no. 86 addresses issues raised by the release last August of SAB no. 78, which concerned matters relating to quasi-reoganizations, including deficit eliminations. Since the issuance of SAB no. 78, the staff has received inquiries about its position on accounting for the tax benefits of operating loss carryforwards existing as of the date of a quasi-reorganization when such benefits are recognized subsequently in the statements.

In SAB no. 86, the staff indicates that the subsequently recognized tax benefits should be recorded as an addition to payed-in capital.
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Title Annotation:staff accounting bulletins
Publication:Journal of Accountancy
Date:Dec 1, 1989
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