Emissions Trading Schemes
Emissions trading schemes are designed to achieve a reduction of greenhouse gases through the use of tradable emission permits. The Board and the FASB are conducting a joint project to develop comprehensive guidance on the accounting for emissions trading schemes.
Where are we in the project?
In March 2009, the Board decided tentatively that an entity should recognise emission allowances received free of charge from government as assets. The allowances should initially be measured at fair value. The Board decided tentatively that if an entity receives allowances free of charge from the government, the entity incurs an obligation to reduce its emissions below the level represented by those allowances (ie its cap). The FASB discussed the project in April 2009. The FASB did not reach any conclusions on the accounting questions related to initial recognition and measurement of emission allowances received free of charge from governments.
What will happen next?
The project team plans to bring a comprehensive package of alternative accounting models to the Board in the second quarter of 2010.
The publication of an Exposure Draft is scheduled for the end of 2010.
Estimated project completion
The publication of an IFRS is scheduled for the end of 2011.
Is this project part of the Memorandum of Understanding?
No. The MoU sets out a Roadmap of Convergence between IFRSs and US GAAP 2006-2008.
Click here for more information on the MoU.
Related projects
There are important interactions between this project and other projects, particularly the Board’s consideration of amendments to IAS 37, leases, revenue recognition and government grants.