Carbon Accounting in Greek Companies Participating in the European Union’s Emissions Trading Scheme: Current Practice and Projected Financial Implications

Karatzoglou, Benjamin; Karatzoglou, Ourania

doi:10.1007/978-94-007-1390-1_10

Cited by 2 publications

(3 citation statements)

References 12 publications

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“…Our results point to great diversity when it comes to the accounting treatment of emission rights in the annual accounts of firms, and is in agreement with the scant number of prior research studies to this end [22,28,32].…”

Section: Explanatory Analysissupporting

confidence: 78%

“…The standardization of accounting entries is a prerequisite for comparability of corporate performance [32]. We encourage international bodies (such as the FASB and IASB) to find a consensus and issue a definitive standard that will put an end to the inconsistency currently prevailing in the treatment of assets, liabilities, and expenses deriving from emission rights [53].…”

Section: Discussionmentioning

confidence: 99%

“…For example, Ref. [32] showed that six Greek firms debited the acquisition of emission rights in their intangible assets accounts, seven firms monitored their greenhouse emissions with provisions accounts, no firm fully applied the IFRIC 3 approach, while the majority of the firms did not make any accounting entry, recognizing the allowances granted at nil value. These findings are close to those produced by the PwC-IETA (2007) survey; in that case, 65% of the respondents recognized the allowances granted within intangible assets, 5% of the respondents applied the IFRC 3 approach, while 30% recognized the granted allowances at nil value.…”

Section: Theoretical Backgroundmentioning

confidence: 99%

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Accounting Treatment for Carbon Emission Rights

Gallego‐Álvarez

Martínez‐Ferrero

Cuadrado‐Ballesteros

2016

Systems

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Abstract:In light of the growing demand for sustainable behavior and the special interest that has emerged regarding the social and environmental impact of firms, the purpose of this research is to analyze the determinants of the accounting treatment of emission rights. To achieve that purpose, we use a sample composed of 119 firms worldwide from different countries and activity sectors for the period 2011. Our findings show different accounting treatments depending on a series of factors. Specifically, firms pertaining to countries that have adopted Environmental Trading Schemes (ETS) tend to account for emission rights through provisions, investments, or as inventory. For their part, firms that issue indicators that appear in the report drawn up by KPMG and GRI (2007) tend to account for these entries as expenses, especially as R + D expenses. Finally, firms located in countries that signed the Kyoto protocol have a tendency to not account for carbon emission rights. The findings of this work can be considered of great interest on the international level because our research contributes to the scant previous literature regarding the accounting treatment of emission rights.

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Section: Explanatory Analysissupporting

confidence: 78%

Section: Discussionmentioning

confidence: 99%

Section: Theoretical Backgroundmentioning

confidence: 99%

See 1 more Smart Citation

Accounting Treatment for Carbon Emission Rights

Gallego‐Álvarez

Martínez‐Ferrero

Cuadrado‐Ballesteros

2016

Systems

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Corporate Climate Change-Related Accounting and Taxation

Monteiro,

Lemos,

Martin

et al. 2023

Taking on Climate Change Through Green Taxation

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This chapter aims to provide an overview of corporate climate change-related accounting and taxation practices in Portugal and Spain. The Portuguese Accounting and Financial Reporting Standard No. 26: Environmental Matters and the Spanish Royal Decree 602/2016 establish the current accounting treatment for greenhouse (GHG) emissions. While the initial measurement basis is the same in both countries (cost when licenses are acquired or fair value when obtained for free), the accounting regulations prescribe different accounting treatments for the initial recognition. In Spain, allowances are recognized as inventories, while in Portugal, they are recognized as intangible assets. Interestingly, the Portuguese regulation uses the FIFO inventory method to calculate the amortization of the intangible asset. Regarding corporate income tax, there is no specific treatment for emission allowances in either country's tax legislation. Additionally, a reverse-charge mechanism on CO2 emissions trading has been introduced in Europe, resulting in no differences between countries concerning VAT.

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Carbon Accounting in Greek Companies Participating in the European Union’s Emissions Trading Scheme: Current Practice and Projected Financial Implications

Cited by 2 publications

References 12 publications

Accounting Treatment for Carbon Emission Rights

Accounting Treatment for Carbon Emission Rights

Corporate Climate Change-Related Accounting and Taxation

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