Closing Stock

The treatment of stock for PRT purposes does not follow the normal accountancy practice of lower of cost or market value. The usual treatment is regarded as inappropriate because of the difficulty in ascertaining precisely the cost of production and the high value of oil in relation to the cost of production.

Instead, for the purposes of PRT, a participator is charged under OTA75\S2(5)(d) on one-half of the market value of so much of his share of oil won and saved as he had either

(1)not disposed of and not relevantly appropriated; or

(2)disposed of but not delivered.

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