About Accounting for Solar Power Generation Enterprises
Five Issues in the Accounting for Solar Power Plants1. Depreciation of Power Generating Equipment Investment in a solar power plant is in most cases characterized by fixed assets that carry most of the cost. 2. Accounting Treatment For Land Lease And Asset Retirement Obligation . 3. Assessment And Recognition Of Impairment At Period End . 4. Equipment Lease . 5. Capital Expenditures and Repair Expenses .
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6 FAQs about [Accounting for Solar Power Generation Enterprises]
How does accounting affect a power & utility entity's financial statements?
The accounting for financial instruments can have a major impact on a power and utility entity’s financial statements. Many utilities use a range of derivatives to manage the commodity, currency and interest rate risks to which they are operationally exposed.
How does investment in fixed assets affect a solar business?
For solar and other renewable energy businesses, investment in fixed assets accounts for a significant part of the expenditure, for example, solar panels in the case of solar energy.
What is a renewable generating asset (Rec)?
When the owner of a renewable generating asset produces power from its facilities, it receives a REC for each MWh generated. RECs are market-based instruments that certify that the bearer owns an instrument that represents one MWh of electricity generated from the renewable energy facility.
Will solar customers be compensated through net metering?
Public Utilities Commission of Nevada (PUCN) — In September 2017, the PUCN approved a draft order establishing revised rules and regulations for how solar customers will be compensated through net metering.
Does IFRS cover the generation of CERs?
No specific accounting guidance under IFRS covers the generation of CERs. Entities that generate CERs should develop an appropriate accounting policy. Most entities that need CERs are likely to acquire them from third parties and account for them as separately acquired assets.
What are generating assets?
Generating assets are often large and complex installations. They are expensive to construct, tend to be exposed to harsh operating conditions and require periodic replacement or repair. This environment leads to specific accounting issues.