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ACCOUNTING CHOICES AND THEIR DETERMINANTS IN OIL AND GAS ACTIVITIES OF GLOBAL MAJOR COMPANIES

Business Management Review

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Title ACCOUNTING CHOICES AND THEIR DETERMINANTS IN OIL AND GAS ACTIVITIES OF GLOBAL MAJOR COMPANIES
 
Creator Chalu, Henry; UDBS
 
Description One of the two objectives of this study was to determine whether there is significant variation in accounting treatment choice of oil and gas activities of major oil and gas companies, and the second objective was to identify critical factors for accounting choice. To achieve the objectives, the study collected data from 25 major oil and gas companies using a checklist of items (index) which was used to review accounting policies covered by the financial statements of these companies. The data collected was analysed using both descriptive and inferential statistics whereby non-parametric tests were used. The study findings show that in case of accounting treatment choices, there are significant variations in accounting treatment on oil and gas activities. In case of determinants, the study found that company size has influence on initial measuring decommissioning liability, using proved reserves as basis for unit of production, using fair value as well as recognition of both cash payments and value of future assets in case of unproven reserves. Company location was found to have influence on use of LIFO to value inventories, not recognising deferred taxes at initial recognition of decommissioning liability, use of proved reserves as a basis for unit of production, recognition cash payments received only in case of unproven reserves, as well as application of successful efforts method. Duration was found to influence the use of reducing balance method to depreciate its assets as well as not recognising deferred taxes at initial recognition of decommissioning liability. The study suggests that accounting standard setters have to strike a balance between harmonisation and accounting flexibility, to ensure that accounting data is both comparable and informative.
 
Publisher University of Dar es Salaam
 
Contributor
 
Date 2019-06-18
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier https://journals.udsm.ac.tz/index.php/bmr/article/view/2601
 
Source Business Management Review; Vol 22, No 1 (2019): Special Issue on Oil and Gas; 31-66
2546-213X
0856-2253
 
Language eng
 
Relation https://journals.udsm.ac.tz/index.php/bmr/article/view/2601/2652
 
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