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IFRIC issues draft interpretation on emissions trading schemes

  • IFRIC (International Financial Reporting Interpretations Committee) (blue) Image

15 May 2003

The International Financial Reporting Interpretations Committee (IFRIC) has published for comment a draft Interpretation on accounting for transferable emissions (pollution) allowances.

Draft Interpretation D1, Emission Rights, is IFRIC's first draft Interpretation. Comment deadline is 14 July 2003. D1 would require companies to account for the emission allowances they receive from governments as intangible assets, recorded initially at fair value. Emissions of pollutant would then give rise to a liability for the obligation to deliver allowances to cover those emissions. Any excess of the fair value of the allowance over the amount paid to the government is initially recognised as deferred income in the balance sheet and subsequently recognised as income on a systematic basis over the compliance period (per IAS 20). Click for Press Release (PDF 29k). The draft Interpretation will be available publicly on IASB's Website on 16 May. More Information.

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