Mega Dump is a multinational company Ltd that is caught by the Emissions Trading Scheme (ETS) of a country called Utopia’s ETS are as follows:

It is a cap and trade scheme in which permits are traded in an activate market.

Its annual compliance period is from 1 July of the current period to 30 June of the following year.

Each participating company receives an allocation of free permits each year based on their reporting carbon emission from previous period. In the case of Mega Dump ltd, permits to emit 36000 tonnes of carbon dioxide equivalent have been issued on the first day of the current period (i.e. 1 July 2019) when the market price of a permit was $25 per tonne of carbon dioxide equivalents.

During the 2019/2020 financial year, Mega Dump emitted 37000 tonnes of carbon dioxide equivalents, which exceeded its permitted emissions of 36000 tones. This occurred despite the managers Mega Dump estimating that it had emitted 24000 tons of carbon dioxide equivalents by 31 March 2020 and was therefore on target to emit 36000 tonnes by 30 June 2020. The market price of a permit is $27 on 31 March 2020. As a result of exceeding allowed emission levels, on 30 June 2020, Mega Dump purchased 1000 permits at a market price of $33 per tonne. Mega Dump uses the cost model in accordance with AASB 138, and amortizes any deferred income arising from the permits using the proportion of actual emissions to estimated total emissions.

Required:

Require necessary Account for these events in the books of Mega Dumb LTD for the period 1 July 2019 to 30 June 2020 in accordance with the requirements of Interpretation 3.

Answer rating: 100% (QA)

The necessary accounts that are prepared are as follows Actual Emissions Account Date Pa... View the full answer