Accounting norms for C-credits from July 1

MUMBAI: Accounting guidelines on carbon credits will come into force from July 1. ���The Council of the Institute of Chartered Accountants of India (ICAI) has scheduled a meeting between June 18-20 to approve the accounting guidelines on carbon credits,������ S Santhana Krishnan, chairman, Accounting Standards Board, ICAI, told TOI. Krishnan said that the guidelines will be made applicable to companies with effect from July 1.

This means, corporates will have to account for their issued carbon credits, as well as carbon credits which they may have sold in the current financial year, in the September quarter results.

For the current financial year, companies will have to account for carbon credits sold or issued to them by the United Nations Framework Convention on Climate Change (UNFCCC) from April 1 this year.

The core group, which framed the draft guidance note on the accounting guidelines, has concluded that carbon credits are ���intangible assets��� ��� and they need to be treated as "inventory" in the balance sheet till they are sold. TOI had reported this in its edition dated January 7, 2009.

Under UNFCCC���s clean development mechanism (CDM), a developed country can take up a greenhouse gas (GHG) reduction project activity in a developing country where the cost of GHG reduction is usually much lower and the developed country would be given carbon credits for meeting its emission reduction targets.

The unit associated with CDM is certified emission reduction (CER), which are generally termed carbon creditswhere one CER is equal to one metric tonne of carbon dioxide equivalent.

���With large number of entities in India generating carbon credits and the carbon credits being a relatively new area, a need was felt to provide accounting guidance in this area,������ the guidance note states.