[Code of Federal Regulations]
[Title 30, Volume 2]
[Revised as of July 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 30CFR220.032]

[Page 203]
 
                       TITLE 30--MINERAL RESOURCES
 
                       DEPARTMENT OF THE INTERIOR
 
PART 220--ACCOUNTING PROCEDURES FOR DETERMINING NET PROFIT SHARE PAYMENT FOR OUTER CONTINENTAL SHELF OIL AND GAS LEASES--Table of Contents
 
Sec. 220.032  Inventories.

    (a) The lessee is responsible for NPSL materiel and shall make 
proper and timely cost and credit notations for all materiel movements 
affecting NPSL property. The lessee shall provide only such materiel as 
may be required for immediate use or is consistent with practical, 
efficient, and economical operations. The accumulation of surplus stocks 
shall be avoided by proper materiel control, inventory and purchasing. 
The lessee shall make timely disposition of idle and surplus materiel 
through sale.
    (b) At reasonable intervals, but at least once every three years, 
inventories of controllable materiel shall be taken by the lessee. 
Written notice of intention to take inventory shall be given by the 
lessee at least 30 days before any inventory is to be taken so that the 
Director may be represented at the taking of inventory. Failure of the 
Director to be represented at an inventory shall bind the Director to 
accept the inventory taken by the lessee, except in the case of willful 
misrepresentation or fraud.
    (c) Inventory shall be valued with any generally accepted accounting 
method used by the lessee to value the same materiel for financial or 
income tax reporting purposes, provided that the method is consistently 
applied throughout the life of the materiel.
    (d) Reconciliation shall be made of a physical inventory with the 
NPSL capital account by the lessee, and a list of overages and shortages 
shall be available to the Director for audit as provided in 
Sec. 220.033. Inventory adjustments of controllable materiel shall be 
made by the lessee to the NPSL capital account for overages and 
shortages. Controllable materiel removed from physical inventory that 
has not been credited to NPSL operations under Sec. 220.015(a)(2) shall 
be credited to NPSL operations at its original value, except that when 
the cost of the materiel originally qualified for the allowance for 
capital recovery in Sec. 220.020, the credit shall be calculated 
pursuant to Sec. 220.021(a)(3).