12 Questions
What do emission rights permit an entity to do?
Emit pollutants up to a specified level
In cap and trade schemes, what can an entity do if it emits fewer pollutants than it has allowances for?
Sell the excess allowances
Why was IFRIC 3, Emission Rights, withdrawn in June 2005?
Due to concerns over the consequences of the required accounting
Under IFRS, what do emission allowances represent?
Assets
What is the key purpose of issuing emission rights by the government?
To allow emissions up to a specified level
How are emission allowances recognized in accounting?
As assets, often presented as part of inventory
How are allowances received free of charge from the government recognised?
At fair value with a corresponding deferred income (liability)
What happens if the residual value of the allowances is less than their carrying value?
The entity recognises an impairment
When are the allowances recognised in the income statement?
When they are delivered to the government in settlement of the liability
What basis can be used for amortisation of government grants over the compliance period?
Units-of-production basis
Under what circumstances is a provision recognised related to delivering allowances or paying fines?
If pollutants have been emitted
In which model can an entity choose to measure subsequent emissions allowances under IAS 38?
Revaluation model
Learn about emission rights trading schemes where entities are allowed to emit pollutants up to a specified level through given or sold emission rights. Discover how tradable emission rights enable entities to trade their allowances for emitting pollutants.
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