Accounting For Carbon Emission Allowances:

• Can you briefly explain what are the impact or issues arising due to the free carbon allowances issued by the government?
• Under the IFRIC 3 Approach, assets (i.e. carbon assets) are recorded at historical cost whilst the liabilities (i.e. carbon liability )is recorded based on its fair value. In that case can it be inferred that assets in some cases might be understated (Historical cost < Fair Value) and the equity as well understated?
• What type of expenses in regards to Accounting For Carbon Emission Allowances will be impacting the Profit and Loss Statement (i.e. income statement)? Provide some examples.
• In the tutorial guide, the following statement is written under theIFRIC 3 approach: "The approach also presents mixed presentation issue in that gains and losses arising from the valuation of liabilities be reported in the income statement, however, the gains and losses derived from the revaluation of the emission allowances assets be recognised under equity in the balance sheet." Can you explain this statement and help me make more sense out of it by relating to some examples and explain to me the overall impact of this on the financial statement?