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Carbon Credits. How does one enter them? I'm not seeing any accounts for them
Hi Dwayne!
Oh my, you've asked a very loaded question!
The problem with carbon credits is that there is actually no real answer. No ruling has been made that tells us what carbon credits truly are. There are two main arguments that I have heard - inventory (with associated income and expenses) and intangibles. All three have their pros and cons. I've been researching this issue for a long time now, and still haven't got a really conclusive answer, unfortunately.
For the time being, what I normally tell people is that if you purchase carbon credits, enter it as an expense, and if you sell them, enter it as income. Every accounting office deals with them differently, and so they will make the necessary adjustments at year end.
I would really like some accountants to chime in with their opinion! I'm still researching this, though I don't expect to have a definitive answer anytime soon.