On 1 July 20X0, the Government allocated emission trading allowances (ETAs) of 1,000 metric tonnes (MT) to Ironbark Ltd at no cost. The ETAs expire after four years. This means they can be used to settle obligations for COy emissions generated up to 30 June 20X4. Settlement of emission obligations for each year to 30 June occurs in August of that year.

ETAs can be traded in an active market. Market values were:

$24 per MT at 1 July 20X0.

$25 per MT at 30 June 20X1.

$27 per MT at 30 June 20X2

Ironbark Ltd's COy emissions were:

Nil for the year ended 30 June 20X1, as the factory was closed due to recurring lockdowns.

200 MT for the year ended 30 June 20X2.

Ironbark Ltd uses the IFRIC 3 model with revaluation to account for its participation in the emission

trading scheme. You should ignore tax effects.

Required

a) Prepare all journal entries required for the year from 1 July 20X0 to 30 June 20X1 to record Ironbark Ltd's participation in the emission trading scheme. (6 marks)

b) State the carrying amount of each of the following items in Ironbark Ltd's financial statements on 30 June 20X2. If the item is not recognized, write NIL. (8 marks)

i) ETA Asset

li) Revaluation Surplus ETA

in) Emission liability

iv) Unearned income liability

c) Does Ironbark Ltd have a mismatch in its statement of financial position on 30 June 20X2 as a result of the accounting treatment of its participation in the emission trading scheme? Justify your answer by reference to the facts of the case.