Oil & Gas
Cost Recovery Entitlement — PSC
Recording the company's entitlement to 'cost oil' under a Production Sharing Contract.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Cost Recovery Receivable (Cost Oil) | Asset (+) | 3,000,000.00 | - |
| Cost Recovery Income (P&L) | Revenue (+) | - | 3,000,000.00 |
💡 Accountant's Note
Under a PSC, the company first recovers its capital and operating costs from a portion of gross production ('cost oil'). The cost recovery entitlement is recognized as revenue as the costs are recovered in each period.
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