Professor Elam

Weekend Sept  17 2016

Apache has converted from full cost method to the successful efforts method for accounting for dry holes.

The difference between the two methods is explained at the end of Chapter Ten in your Spiceland Intermediate text. No, I am not going to explain it here, look it up!

The CEO of Apache notes that most of its peer group uses success efforts. So switching increases comparability of reporting and comparison of the statements between the firms.

Comparability is explained in Chapter One. It is one of the Fundamental Qualitative Characteristics which consist of Primary and Enhancing. It is listed as the first enhancing characteristic including consistency ion the Conceptual Framework.