Machine Translated by Google BOE no. Four. Five Wednesday 22 February 2006 7131 ticos of the Museum of this entity up to a maximum of five pieces regulates the trading system for greenhouse gas emission rights of each of the coins minted by virtue of this ministerial order and, (hereinafter, Law 1/2005). where appropriate, those industrial elements of its manufacture The antecedents of said Law arose as a result of the that, due to the characteristics of the issue, are of numismatic international response to climate change. This response interest attic or museological. materialized in two legal instruments: the United Nations Framework Convention on Climate Change, which entered into Fourth. Initial date of issue.-The initial date of force in 1994, and the Kyoto Protocol, which was ratified by the issuance will be the first half of 2006. Member States of the European Union through the 2002 Decision / Fifth. Minting and putting into circulation. - The coins will be 358/CE of the Council, of April 25, 2002, regarding the approval, minted on behalf of the State, in the National Mint and Stamp on behalf of the European Community, of the Kyoto Protocol of Factory-Royal Mint, which will deliver them to the Bank of Spain. the United Nations Framework Convention on Climate Change Once this delivery has been made, the coins will be available to and the joint fulfillment of the commitments contracted with fix to it. the public, for which the collaboration of the credit institutions will be counted on. They may make their requests to the National Mint and Stamp Factory-Royal Mint in the manner and within the With the aim of ensuring that the Community and its Member timeframe determined by it to meet public demand. The Factory States can fulfill the commitment to reduce greenhouse gas will provide the aforementioned entities with a document to present emissions and within the European Climate Change Program, to the Bank of Spain so that it can deliver the parts. If three months Directive 2003/87/EC of the European Parliament and of the have elapsed from the date of issue of this document without it Council is approved, of October 13, 2003, which establishes a system for the trading of greenhouse gas emission rights. The having been presented to the Bank of Spain for the delivery of system implemented by the Directive is inspired by one of the these coins, it will be considered null and void; the corresponding market instruments provided for in the Kyoto Protocol, emissions pieces, as well as those that return to the Bank of Spain from the trading, which, together with those based on investment projects market, will remain there at the disposal of the public and credit in clean technology in third countries, constitute the so-called institutions. flexibility mechanisms of the Kyoto Protocol. For its part, Law 1/2005 had the purpose of transposing the aforementioned Directive into the Spanish domestic legal system. Both the Bank of Spain and the credit institutions will distribute these coins, handing over the pieces to the public at the same From an accounting point of view, the legal regime for the face value with which they were issued, lacking a Retail Price. trading of emission rights regulated in the aforementioned regulations has raised various doubts about the treatment that Sixth. Measures for the application of this Order.–The General should be given to some of the operations that characterize it. In Directorate of the Treasury and Financial Policy will perform the particular, the free allocation mechanism (totally in the first National interpretation of the precepts that offer doubt and will take the Allocation Plan, and perhaps partially in later ones), and the measures that are necessary for the application of this Order, requirement to deliver emission rights equivalent to the gas acting as a consultation body the Commission of Follow-up cited emissions made in the financial year. precedent, have provoked, in the first section, third number of this Order. both nationally and internationally, debates on the reflection that should be given in the annual accounts to this specific and certainly novel operation. Final disposition. This Order shall enter into force on the day following the The international regulatory panorama on the matter has gone of its publication in the Official State Gazette. through various vicissitudes, given the approval in December Madrid, February 2, 2006. 2004 of an Interpretation on emission rights by the Committee for the Interpretation of International Financial Reporting Standards SOLBES LOOK (also known by its English acronym, IFRIC) –interpretative body of the International Accounting Standards Committee (IASB)–, which was annulled in June 2005 due to the criticism received and Mr. Governor of the Bank of Spain and Mrs. General Director of even the negative opinion that the technical advisory body the Treasury and Financial Policy and Mr. President-General Director of the National Currency and Stamp Factory-Royal (EFRAG) issued on the interpretation in the process. adoption of international standards and interpretations as Regulations of the Mint. European Commission. 3054 RESOLUTION of February 8, 2006, of the Institute of However, this Body showed its agreement with different Accounting and Audit of Accounts, which approves aspects contained in the aforementioned Interpretation; in particular, in relation to the consideration as assets of the standards for the registration, valuation and information aforementioned rights, the reflection as a subsidy of the differentials of greenhouse gas emission rights. between the value of the rights and the consideration, if any, required by them, as well as with respect to the reflection as liabilities of the obligations derived from the emission of greenhouse Royal Decree 1643/1990, of December 20, which approves gases. the General Accounting Plan, in its fifth final provision establishes that the Institute of Accounting and Auditing of Accounts, by Despite the gap that exists in this matter in the internationally Resolution, may issue mandatory rules that develop the valuation accepted accounting standards, it is considered necessary to standards of the General Accounting Plan. develop within the internal accounting regulations, and therefore compulsorily applicable to all the individual annual accounts, as well as to the consolidated annual accounts that formulated in This Resolution develops the aspects related to the accordance with the principles and criteria contained in the Code accounting treatment of emission rights, referred to in Law 1/2005, of Commerce and development regulations (those corresponding of March 9, which to Machine Translated by Google 7132 Wednesday 22 February 2006 BOE no. Four. Five groups in which none of the companies has, at year-end, (materialized through the reception of the transferred rights), securities admitted to trading on a regulated market and have of some costs that were externalized and that are internalized not opted for the application of the International Financial in the new legal framework approved. Reporting Standards adopted through Regulations of the European Commission), the accounting treatment of the With regard to the second of the issues pointed out, aspects related to the registration, valuation and information to regarding whether the incorporation of the emission rights into be included in the annual accounts on the emission rights by the company's assets is produced by the allocation attributed the accounting subjects contemplated in the scope of in the National Plan, with a multi-annual character or, on the application of this Resolution. contrary, only materializes year after year through the transfer received, the criterion specified in the third rule - taking into Consequently, this Resolution is framed as a development account the special characteristics of availability of these of the current General Accounting Plan, approved by Royal assets - opts for this last position, specifically establishing that Decree 1643/1990, of December 20, and, logically, is located they are understood to be incorporated into the equity of the under the principles and evaluative criteria contained therein, company at the beginning of the natural year to which they without prejudice of, where appropriate, the modifications that correspond. should be made in the future in response to the evolution of the Spanish internal accounting regulations, which in turn will The fourth and fifth regulations establish the initial and have a reference in the international regulation on the matter. subsequent evaluation criteria for emission rights. The general principle of the acquisition price provided for in The first rule establishes the scope of application of this the first part “Accounting Principles” of the General Chart of Resolution, which includes all companies that have been Accounts is included and developed, as far as Intangible Fixed awarded greenhouse gas emission rights, through the figure Assets are concerned, in the second valuation standard (by of the National Allocation Plan in accordance with the provisions reference to the valuation standard fourth) contained in the of Law 1/2005. fifth part of the General Chart of Accounts. In the case of emission rights acquired free of charge, in particular those The second rule incorporates the definitions of concepts, both of a strictly accounting nature and of other substantive transferred by virtue of a National Allocation Plan, it must be concepts typical of the regulation of emission rights trading, considered that said acquisition price is the market value of which are used in this Resolution. the emission rights at the time of their incorporation. ration to heritage. For its part, the third rule includes the criteria for registration and classification of the emission rights that are incorporated Taking into account that this intangible asset is not subject into the company's equity, as well as the reasons for their to a systematic depreciation process, the fifth rule establishes removal from the balance sheet. its non-amortizable nature, without prejudice to other valuation The analysis of whether the emission rights received corrections that may correspond to it. through the National Allocation Plans should be subject to accounting records and, if applicable, the moment in which The sixth rule includes the accounting treatment that the they should be understood to be incorporated into the company must follow when emitting greenhouse gases. In this company's assets, constitute aspects that were widely sense, as the company emits said gases, it must reflect the considered. debated within the working group set up at the expense derived from the obligation to return the corresponding Accounting and Audit Institute, to analyze the accounting emission rights. aspects relating to greenhouse gas emission rights. Taking into account the specialty involved in the allocation In this sense, it should be noted that the National Allocation by the Administration of a significant amount of the emission Plan constitutes the reference framework, in force only for rights held by the companies included in the scope of each of the three and five-year periods established in Directive application of this Resolution, the sixth rule establishes the 2003/87/EC. The current National Allocation Plan was approved order that must be followed in the quantification of the cost for the period 2005-2007, through Royal Decree 1866/2004, derived from greenhouse gas emissions. of September 6. Subsequently, the Government adopted a Resolution that includes the individual allocation of emission In this regard, companies must estimate the total gas rights to each of the facilities included in the scope of emissions forecast for the entire period to which the emission application of Law 1/2005. rights transferred to the company correspond, in order to associate, firstly, with the emissions actually produced, the Said Resolution determines the amount of rights assigned to corresponding proportional part of said rights assigned for said each of the facilities during the period of validity of the National period in the National Plan. Assignment Plan and its annual distribution. In the event that the actual emissions exceed the emission Every year, the National Registry of emission rights, in which all the operations related to them are registered, rights that should be attributed to them in accordance with the transfers from the assets account of the General State provisions of the previous paragraph, as well as other possible Administration to that of the owner of each installation, the emission rights that the company has (acquired or generated rights that correspond in accordance with the temporal by it), the company will be incurring a deficit, whose associated distribution established in the aforementioned Resolution. expense must be valued by the best possible estimate of the disbursement to be made to cover said deficit. In this regard and with regard to the registration of emission rights, obtained through a National Allocation Plan, this The seventh rule includes the treatment of the imputation Resolution opts for their reflection on the balance sheet as of the subsidy, in the case of emission rights that have been intangible assets, which will cause the corresponding received by the company free of charge or for a value registration of income to be distributed over several associated substantially lower than its market value. Said imputation must years, considering that the transfer of emission rights to be carried out, in general, as the expenses are charged for the companies, without compensation, implies a subsidy by the emissions associated with the rights received without Administration to companies consideration. Machine Translated by Google BOE no. Four. Five Wednesday 22 February 2006 7133 The eighth and ninth regulations establish, respectively, Kyoto Protocol to the United Nations Framework Convention on Climate the accounting treatment of the expenses for sanctions derived Change. from the infractions that may be committed in this area, as well Third. Accounting record, qualification and low balance. as the minimum information that, whenever it is significant, must be included in the annual report. the annual accounts. 1. Emission rights will be recorded in the balance sheet It should also be noted that the references contained in the when the rights that originate them are born for the company, regulations of this Resolution are made to the normal models whether they are: of annual accounts, and must be adapted, where appropriate, a) transferred to the company's holding account in the to the characteristics of the abbreviated models or, where corresponding National Registry of emission rights, in accordance appropriate, simplified. fied. Notwithstanding the foregoing, the with the temporary distribution established in the Resolution that report note contained in the ninth rule presents the content that determines the emission rights assigned to each installation or companies, whatever their size, must reflect on this matter, group of installations within the National Allocation Plan. In within the framework of the provisions of rule 7 on the preparation particular, in this case, it will be understood that the right arises of annual accounts, contained in the fourth part of the General at the beginning of the calendar year to which they correspond. Chart of Accounts. b) acquired or generated by the company. Finally, the tenth rule describes the accounts that may be used on a voluntary basis under the terms provided in article 2 2. Emission rights will appear under heading B.II: Intangible of Royal Decree 1643/1990, which approves the General fixed assets of the balance sheet, creating a specific item with Accounting Plan, in order to facilitate the registration of the name, "Greenhouse gas emission rights". operations included in this Resolution. 3. The emission rights will be removed from the balance In accordance with the foregoing, taking into account the sheet on the occasion of their transmission to third parties, need to specify and develop the information that the annual delivery or expiration of the same. accounts must reflect in this regard and in order to provide a Quarter. Initial assessment. standard that includes the criteria that Spanish companies must apply, within the framework of the internal regulations, by virtue 1. Emission rights must be valued at the acquisition price or of article 2 of Law 19/1988, of July 12, on Audit of Accounts and production cost, determined in accordance with the provisions of the valuation standards of the General Accounting Plan, the fifth final provision of Royal Decree 1643/1990, of December 20, which approves the General Plan of Accounting, this Institute approved by Royal Decree 1643/1990, of December 20. of Accounting and Auditing of Accounts issues the following Resolution: In the case of rights acquired free of charge or for a price substantially lower than their market value, the market value thereof at the time of acquisition shall be considered as the First. Area of application. acquisition price. In particular, the emission rights received 1. This Resolution will be applicable, in general, for the through the National Allocation Plan will be valued at the registration, valuation and information that must be included in beginning of the calendar year to which they correspond. the annual accounts, of the greenhouse gas emission rights, so that they express the true image of the assets. , of the financial 2. For the purposes of assessing the emission rights whose situation and of the results of the accounting entity. origin is a certified reduction of emissions or a unit of reduction of emissions from clean development mechanisms or joint application, under the terms provided in Law 1/2005, The 2. This Resolution will apply to any company that has been provisions of Rule Five shall apply. Joint Production, of the awarded emission rights through a National Assignment Plan, Resolution of May 9, 2000 of the Institute of Accounting and by virtue of the provisions of Law 1/2005, of March 9, which Audit of Accounts, which establishes criteria for determining the regulates the trading system for greenhouse gas emission rights. cost of production. Second. Definitions.-For the purposes of this Resolution, Fifth. Subsequent valuation.–After their registration as an the following definitions will be taken into account asset, the emission rights will be valued at their acquisition price nes: or production cost and will not be amortized. The necessary provisions must be allocated in order to attribute them the lower 1. Emission right.– The subjective right to emit, from a market value that corresponds to them at the end of each facility included in the scope of application of this Resolution, an financial year, provided that their book value is not recoverable equivalent ton of carbon dioxide, during a given period. by the generation of sufficient income to cover all costs and 2. Market value of emission rights.–The market value of an expenses. Without prejudice to the provisions of Rule Seven of this Resolution, the provisions will be annulled to the extent that asset or right is the price that it is presumed that an eventual the causes that motivated the correction of the value of the acquirer would be willing to pay, taking into account the state emission rights disappear. and place in which it is located. The market value will be assessed based on the situation of the company and, generally, under the hypothesis of continuity of exploitation of the asset or right. In the case of emission rights, their market value will Sixth. Greenhouse gas emission expenses. generally be the market value. 1. Expenses related to the emission of greenhouse gases 3. Certified emission reduction.–A unit issued in accordance will require the corresponding provision for risks and expenses, with Article 12 of the Kyoto Protocol to the United Nations since it is an expense of the year, clearly specified as to its Framework Convention on Climate Change. nature, but that, on the closing date of the year is undetermined as to its exact amount. This provision will be maintained until 4. Emission reduction unit. - A unit issued in accordance such time as the with article 6 of the Proto Machine Translated by Google 7134 Wednesday 22 February 2006 BOE no. Four. Five company has to cancel said obligation by delivering the nothing with the infractions that a company may have committed, corresponding emission rights. in accordance with the provisions of Law 1/2005. Said expenses will accrue as greenhouse gases are emitted. Ninth. Information to be supplied in the report.–In the report of the annual accounts, all significant information must be provided 2. The amount of the aforementioned expenses and the in relation to the elements described in the previous regulations, correlative provision will be determined considering that the and in particular: obligation will be cancelled: a) In the first place, through the emission rights transferred to 1. In section “4. Valuation standards”, it will be indicated: the company's holding account in the National Registry of Emission Rights, through a National Allocation Plan, and which are kept in 1. Valuation criteria for greenhouse gas emission rights, as the company, which must be imputed to the emissions made in well as allocation to results of expenses derived from greenhouse proportion to the total emissions forecast for the full period for gas emissions. which they have been allocated. 2. A new section 23 is created. "Information on greenhouse gas emission rights" in which, succinctly, the following information The expense corresponding to this part of the obligation will must be provided, among others: be quantified based on the accounting value of the transferred emission rights. b) Then, through the remaining rights a) Information on the amount of rights assigned during the issue that appear on the company's balance sheet. period of validity of the National Allocation Plan and its annual The expense corresponding to this part of the obligation will distribution, as well as whether the allocation has been free or be quantified, in general, in accordance with the method of the remunerated. average price or weighted average cost of said emission rights. b) Analysis of the movement during the year of the balance sheet item. “Greenhouse gas emission rights” and the corresponding c) In the event that the emission of gases entails the need for provisions that could correct their value, indicating the following: the company to acquire or generate emission rights, because the emissions made exceed those that can be canceled either through the rights transferred in a National Allocation Plan that are Initial balance. attributable to these emissions, or through the remaining emission Tickets or acquisitions. rights, acquired or generated, that the company has, the expense Disposals and other write-offs. that corresponds to the rights deficit must also be considered. Ending balance. c) Expenses for the year derived from emissions of greenhouse gases, specifying their calculation. This expense will be quantified according to the best possible d) Amount of the "Provision for greenhouse gas emission estimate of the amount necessary to cover the rights deficit. rights", specifying within it, where appropriate, the amount that proceeds due to deficits in emission rights. 3. These gas emission expenses will appear in the group e) Information on futures contracts relating to "Other operating expenses" on the debit side of the profit and loss greenhouse gas emission rights. account, and the associated provisions will appear in group F) f) Subsidies received for greenhouse gas emission rights and "Provisions for short-term risks and expenses" in the balance sheet amounts imputed to results as income for the year. liability. g) Contingencies related to provisional sanctions or measures, If the amount of said expenses and provisions is significant, specific items will be created within the groups indicated, with the in the terms provided in Law 1/2005. names, respectively, of "Expenses for greenhouse gas emissions" and "Provision for greenhouse gas emission rights". greenhouse". h) If applicable, the fact of forming part of a group of facilities. Tenth. Accounts to be used for the registration of greenhouse Seventh. Allocation of subsidies associated with greenhouse gas emission rights. Without prejudice to the non-compulsory gas emission rights.– Non-reimbursable subsidies associated with nature of their numbering and denomination, the following accounts emission rights, acquired free of charge or for a value substantially are proposed: less than their market value, will be accounted for as «Income to In subgroup 21: be distributed over several years» and will be allocated, as «216. Greenhouse gas emission rights. extraordinary income, as expenses derived from gas emissions related to subsidized emission rights are allocated to results, in accordance with the provisions of Rule Six of this Resolution. Greenhouse gas emission rights owned by the company, by virtue of a National Assignment Plan or by acquisition or generation: His move is as follows: The depreciations that may affect the emission rights, will a) It will load: result in the imputation to results of the corresponding subsidy in proportion to them, being considered in any case of an irreversible a1) For the market value of greenhouse gas emission rights nature in the part in which these rights have been financed free of received free of charge, in particular through a National Allocation charge. Plan, generally credited to subgroup 13 accounts. Eighth. Expenses for sanctions.- Those that must be allocated a2) For the acquisition price or production cost, with a credit, to meet obligations derived from sanctions related to the law will generally, to accounts in subgroup 57 or to account 731. be classified as extraordinary expenses. Machine Translated by Google BOE no. Four. Five Wednesday 22 February 2006 7135 b) It will be paid for the delivery to the Administration, charged Final disposition. Entry into force. to account 149; for disposals and, in general, for write-offs, with a charge, generally, to accounts in subgroup 57 and, in the event of This Resolution will enter into force the day after its publication losses, to account 670.» in the Official State Gazette. In subgroup 14: Madrid, February 8, 2006, the President, José Ramón González García. «149. Provision for greenhouse gas emission rights. Those established to meet the obligations to deliver emission rights, as a result of the emission by the company of greenhouse gases, whose payment is undetermined as to its exact amount. 3055 CORRECTION of errors in Order EHA/4046/2005, of December 21, which approves the average sales His move is as follows: prices applicable in the management of the Tax on Property Transfers and Documented Legal Acts, Tax a) It will be paid based on the estimated annual accrual on Inheritance and Donations and Special tax on charged to account 658. certain means of transport. b) It will load: b1) When the provision is applied, with a credit to account 216. b2) For the excess provision, with a credit to the 790 account.» Errors noted in Order EHA/4046/2005, of December 21, which approves the average sales prices applicable in the management In the 65 subgroup: of the "Tax on Patrimonial Transfers and Documented Legal Acts, Tax on «658. Greenhouse gas emission expenses Inheritance and Donations and Special Tax on Certain Means of Transport”, published in the Expenses derived from the emission of greenhouse gases. Official State Gazette number 309, dated December 27, 2005, the appropriate rectifications are made: It will be charged with credit to account 149.»