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As US Debate Continues, Australian Carbon Tax Poses Accounting Conundrum

A carbon emissions tax in Australia has some wondering if companies are able t

The debate about global warming and business has lost some of its hype in the media, but behind closed doors, legislators in Washington have continued the discussion of a possible national carbon tax. While its implementation, if passed, would be years away, American businesses can look at the

The debate about global warming and business has lost some of its hype in the media, but behind closed doors, legislators in Washington have continued the discussion of a possible national carbon tax. While its implementation, if passed, would be years away, American businesses can look at the experiences of their Australian counterparts to get a glimpse of the possibilities.

The Australian Accounting Standards Board recently circulated a discussion paper to determine whether the country's new carbon tax permit regulations provide potential business investors with enough information to make informed decisions, according to The Advertiser Newspapers. The rules allow companies to take one of two approaches to reporting the permits: a "gross" approach and a "net" approach.

Under the "gross" approach, businesses that buy permits can recognize them as assets offset by liabilities that could grow as carbon emissions increase, according to the source. Under the "net" approach, companies that receive free permits from the government aren't required to report their emissions liabilities until they have exceeded the cap.

"There is potentially less information for users but they may also want less information because it doesn't actually impact on cash flows and they may only want information they see as important," Vincent Sheehan, partner at Ernst & Young, told the source.

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