Accounting alternatives for cost recognition: an empirical analysis of the matching principle employed in the oil-producing industry

Thesis/Dissertation · Tue Jan 01 04:00:00 EST 1985

OSTI ID:5837108

Wright, G B

The research considers whether a firm's choice in applying the matching principle for cost recognition follows an arbitrary choice of management or whether it reflects the real economic circumstances that differentiate firms that use alternative methods. The empirical model developed is intended to provide a framework to aid the standard-setting process when a reduction of alternatives is desired. The sample used in the study is the Dyckman and Smith sample that formed the basis for the 1979 Research Report published by the Financial Accounting Standards Board on the Effects of the Exposure Draft and Statement No. 19. The model asserts that tests of financial and growth differences over the period 1971-1979 will not identify differences in firms that use alternative methods to recognize prediscovery costs of exploration. A multiple discriminant analysis is used to determine the nature of financial differences. Stages and rates of growth are tested to determine whether differences can be explained by the choice of accounting method used to recognize the cost of exploration. Results indicate that there are significant financial differences in firms that choose alternative methods to account for costs of exploration in the oil-producing industry.

• Research Organization: George Washington Univ., Washington, DC (USA)
• OSTI ID: 5837108
• Country of Publication: United States
• Language: English

Related Subjects

02 PETROLEUM
020700* -- Petroleum-- Economics
Industrial
& Business Aspects
29 ENERGY PLANNING, POLICY, AND ECONOMY
290200 -- Energy Planning & Policy-- Economics & Sociology
294002 -- Energy Planning & Policy-- Petroleum
ACCOUNTING
COST
EXPLORATION
INDUSTRY
MATHEMATICAL MODELS
PETROLEUM INDUSTRY