Polluter Free Essays

Polluter Corp (the â€Å"Company†) has three manufacturing facilities in the United States, which produce various household cleaning products. The company has a fiscal year end of December 31 and was granted emission allowances (â€Å"EAs†) of various vintage years to be used between 2010 and 2030. To comply with The Federal Energy Regulatory Commission (â€Å"FERC†) accounting guidance, Polluter recorded the EAs as intangible assets with a cost basis of zero. We will write a custom essay sample on Polluter or any similar topic only for you Order Now Each individual EA has a vintage year designation and those with the same vintage year designation are interchangeable, which allows entities to either buy or sell EAs to other entities, usually initiated through a broker. The Company has plans to upgrade its facilities in 2014 in order to decrease greenhouse gas emissions. It is anticipated the company will need additional EAs in fiscal years 2010-2014 but also believe there will be excess EAs after 2014. The Company operates in a capital-intensive industry and analysts and investors focus on important ratios and measures including working capital, capital expenditures, cash flows from operations, and free cash flow. The company entered into the following two separate transactions in fiscal year 2010 which will impact the Company’s results as presented in the statement of cash flows. . To meet its need for additional EAs in fiscal years 2010-2014, on April 2, 2010, the Company spent $3 million to purchase EAs with a vintage year of 2012 from Clean Air Corp. 2. In an effort to offset the costs of the April 2, 2010, purchase of 2012 EAs, the Company sold EAs with a vintage year of 2016 to Dirty Chemical Corp. for $2 million How to cite Polluter, Papers