granted carbon dioxide emissions allowances received in a period are recognised init 612377

Centrica plc (2011)

SUPPLEMENTARY INFORMATION [extract]

S2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [extract]

EU Emissions Trading Scheme and renewable obligations certificates [extract]

Granted carbon dioxide emissions allowances received in a period are recognised initially at nominal value (nil value). Purchased carbon dioxide emissions allowances are recognised initially at cost (purchase price) within intangible assets. A liability is recognised when the level of emissions exceed the level of allowances granted. The liability is measured at the cost of purchased allowances up to the level of purchased allowances held, and then at the market price of allowances ruling at the balance sheet date, with movements in the liability recognised in operating profit.

Forward contracts for the purchase or sale of carbon dioxide emissions allowances are measured at fair value with gains and losses arising from changes in fair value recognised in the Income Statement. The intangible asset is surrendered and the liability is utilised at the end of the compliance period to reflect the consumption of economic benefits.