Discuss the nature of emission allowances

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Reference no: EM131661198

Assignment Details:

A growing number of jurisdictions have introduced different carbon pricing policies such as carbon taxes or emission trading schemes (ETS) in response to emission reduction targets established by the Kyoto Protocol. An ETS probably is the most widely adopted carbon market system in the world affecting corporate carbon activities and disclosure. The European Union (EU ETS) was the first - and is still by far the biggest - international system for trading GHG emission allowances. However, moves have also been made in Australia, USA (California), China and South Korea among others and different countries have divergent practices on establishing and implementing an ETS. Pinkse and Kolk (2009) argued that "an emission trading scheme is a new type of institution, which sets boundaries on the amount of GHG that companies can emit into the atmosphere and defines how this burden is shared among market participants through a price mechanism."

An ETS normally takes the form of ‘cap-and trade' system. In a cap and trade scheme, the level of the scheme cap determines the environmental contribution of the scheme: the lower the cap, the more abatement (reduction in emissions) required. The cap is the limit on GHG emissions which must be consistent with national longer term targets for carbon reduction. Once the cap is established, the government then issues allowances that are equal to the cap. Allowances can be allocated for free by government, or auctioned, and subsequently traded in the market. With each tonne of emissions, the firm is required to acquire and surrender an allowance. If companies emit more than allocated allowances, they must either purchase additional allowance or pay a fine. However, if firms have less emissions than allocated allowances, they can sell the remaining allowances in an active market.

Required:

Write a report (maximum 2,000 words) to discuss the accounting treatment of the emission allowances and its effect on the financial statements. The appropriate accounting treatment for emission allowances is important for the implementation of ETS and one of the purposes of the assignment is to improve students' research skill.

In your report you are required to:

- Discuss the nature of emission allowances and provide justification.

- Discuss how emission allowances should be measured initially and

subsequently. Provide journal entries for these transactions.

- Discuss the consequences of emission allowances on the financial statements, including balance sheet, income statement and cash flow statement.

Reference no: EM131661198

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Reviews

len1661198

9/27/2017 8:27:26 AM

The Report Adequate language which Poor language impedes meaning because of errors Professional language is used conveys meaning with some in usage and which communicates meaning clarity, however there the report disorganisation of with clarity and fluency. is inconsistent in its flow from Presentation of the report and information. 3 one idea to the next and there quality of writing Consistent errors in No errors in spelling, grammar are errors in expression. spelling, grammar, and punctuation, or sentence Errors in spelling, grammar, punctuation, sentence structure. (3’) punctuation, sentence structure, structure and/or and/or organisation (1-2’) organisation. (0) An adequate attempt at Lack of proper referencing. Either references are Referencing appropriate with no referencing was made with Referencing 2 missing or the referencing errors or omissions. (2’) minor errors or omissions in the style has not been applied style of referencing. (1’) accurately. (0) Total 25

len1661198

9/27/2017 8:27:22 AM

Thorough discussion and Limited discussion and None or improper comprehensive justification discussion provided as to Discuss how emission allowances justification provided as to the provided as to the different the different accounting should be measured subsequently. different accounting treatments 6 accounting treatments of the treatments of emission Provide journal entries for these of the emission allowances. emission allowances. Proper allowances. Journal entries transactions. Journal entries attempted, but journal entries are consistent either not attempted, or not not completely correct. (2-4') with the discussion. (5-6) correct. (0-1') Discuss consequences of emission 6 Discuss thoroughly the Limited discussion of the impact Inadequate discussion of allowances on the financial associated impact of emission of emission allowances on the the impact of emission statements, including balance allowances on the balance sheet, balance sheet,

len1661198

9/27/2017 8:27:02 AM

Marking Rubric Criteria Marks Excellent Satisfactory Poor Score Emission Allowances Properly identify the nature of Discuss the nature of emission emission allowances and Properly identify the nature of No justification or incorrect allowances and provide 4 provide comprehensive emission allowances but provide justification. (0') justification justification with reference to limited justification. (1-2’) the Framework. (3-4’) Thorough discussion and Limited discussion and None or improper comprehensive justification discussion provided as to Discuss how emission allowances justification provided as to the provided as to the different the different accounting should be measured initially. different accounting treatments 4 accounting treatments of the treatments of emission Provide journal entries for these of the emission allowances. emission allowances. Proper allowances. Journal entries transactions. Journal entries attempted, but journal entries are consistent either not attempted, or not not completely correct. (2-4') with the discussion. (5-6) correct. (0-1')

len1661198

9/27/2017 8:26:52 AM

Any assignment submitted late will be penalised at a rate of 10% per day of the possible maximum mark for the assignment for each day or part day that the assessment is late. Any assignment submitted more than five days after the due date will be awarded zero marks. Note that it is each student’s responsibility to keep a copy of each assessment task submitted. The assignment item cover sheet must be used, which is attached at the end.

len1661198

9/27/2017 8:26:44 AM

INDIVIDUAL assignments are to be submitted in hardcopy form in the LECTURE on Thursday 19 (Week 11). It is MANDATORY that the hardcopy individual assignment submitted in the lecture has been submitted in electronic form to Turnitin beforehand. Note, the hardcopy submitted in the lecture must be exactly the same as the electronic version submitted to Turnitin. The purpose of this assignment requires you to apply critical thinking, analyzing accounting treatment methods and report writing skills. The maximum word count for this assignment is 2000 words. Answers should be typed using MS word and 1.5 lines spacing with at least 2.5 cm margins.

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