ACCOUNTING FOR CARBON EMISSIONS AND CARBON CREDITS UNDER IFRS/VAS

Abstract

Carbon Accounting is an essential field that provides the framework for the recognition, measurement, and disclosure of carbon instruments in financial statements, especially in the context of Vietnam piloting a carbon market.

This article analyzes the challenges in applying International Financial Reporting Standards (IFRS) and Vietnamese Accounting Standards (VAS) to Emission Allowances and Carbon Credits. Due to the lack of specific guidance in VAS, enterprises face difficulties in classifying these as assets or liabilities. This study focuses on accounting methods for Emission Allowances under IFRS (such as Intangible Assets - IAS 38 or Provisions - IAS 37) and proposes recommendations for accounting for Carbon Credits as intangible assets (when purchased for offsetting) or revenue (when sold). The ultimate goal is to propose a specific roadmap for harmonizing VAS with international standards, thereby enhancing financial transparency and effectively supporting the national carbon management system.