Polluter Corporation
Case 11-1: Polluter Corp
Polluter Corporation is a manufacturing firm in the United States registered with the Securities and Exchange Commission. Polluter Corp. operates three facilities manufacturing various household cleaning products. These products produced are sold to retail customers. The United States government funded their company with emission allowances (EAs). An emission allowance is an authorization to emit a fixed amount of a pollutant. An emissions allowance is sometimes also referred to as a permit. An allowance is a fully marketable commodity that may be bought, sold, or traded for use by entities covered by the program. The gov’t granted those EAs with varying vintage years which is the number of years the allowance may be used.
Polluter Corp. EAs were to be used between 2010 and 2030 which is substantial time. Once the company received their receipt they record the EAs as intangible assets with a cost basis of zero, in accordance with The Federal Energy Regulatory Commission (FERC). FERC is accounting guidance for EAs so companies understand rules and regulations associated with the allowance. Governing bodies generally issue rights to help control or reduce the emission of pollutants and greenhouse gases. They also allow entities to emit a specified level of pollutants. EAs individually have vintage year designation, but EAs with the same vintage year destination are replaceable and can be replaced by another identical item. EAs with the same vintage year destination also can be used by any party to satisfy pollution control obligations.
One issue with the company is the significant amount of greenhouse gases emitted. Polluter Corp. is an antiquated manufacturing facility that produces gas and has plans to decrease the greenhouse gas emissions to a lower level by 2014. The company believes they will need additional EAs to upgrade but with the decrease in gas emissions this will create excess EAs. The company plans to meet its need
Polluter Corporation is a manufacturing firm in the United States registered with the Securities and Exchange Commission. Polluter Corp. operates three facilities manufacturing various household cleaning products. These products produced are sold to retail customers. The United States government funded their company with emission allowances (EAs). An emission allowance is an authorization to emit a fixed amount of a pollutant. An emissions allowance is sometimes also referred to as a permit. An allowance is a fully marketable commodity that may be bought, sold, or traded for use by entities covered by the program. The gov’t granted those EAs with varying vintage years which is the number of years the allowance may be used.
Polluter Corp. EAs were to be used between 2010 and 2030 which is substantial time. Once the company received their receipt they record the EAs as intangible assets with a cost basis of zero, in accordance with The Federal Energy Regulatory Commission (FERC). FERC is accounting guidance for EAs so companies understand rules and regulations associated with the allowance. Governing bodies generally issue rights to help control or reduce the emission of pollutants and greenhouse gases. They also allow entities to emit a specified level of pollutants. EAs individually have vintage year designation, but EAs with the same vintage year destination are replaceable and can be replaced by another identical item. EAs with the same vintage year destination also can be used by any party to satisfy pollution control obligations.
One issue with the company is the significant amount of greenhouse gases emitted. Polluter Corp. is an antiquated manufacturing facility that produces gas and has plans to decrease the greenhouse gas emissions to a lower level by 2014. The company believes they will need additional EAs to upgrade but with the decrease in gas emissions this will create excess EAs. The company plans to meet its need