Feed-in Tariff (FiT) Revenue Recognition
Recognizing revenue from selling renewable electricity to the grid at a government-mandated, above-market fixed premium rate.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Accounts Receivable - State Utility | Asset (+) | 85,000.00 | - |
| Revenue - FiT Electricity Sales | Revenue (+) | - | 85,000.00 |
💡 Accountant's Note
Feed-in Tariffs (FiTs) are policy mechanisms designed to accelerate green investment by offering long-term contracts (15-20 years) to renewable producers. The price paid is usually higher than the standard wholesale market price. Revenue is recognized under IFRS 15 as MWh are delivered.
Practitioner & Systems Framework
💻 ERP Architecture
Standard Accounts Receivable process. However, some utilities break the payment into two lines: the base market price and the FiT premium subsidy. Both generally roll up into total revenue.
⚠️ Audit Flags
Verification of the specific FiT tier the asset qualified for (older assets usually have much higher FiT rates). Auditors will check the expiration date of the FiT contract, as a drop-off to standard market rates can trigger an impairment test.
📄 Required Documentation
FiT contract/award letter from the government or utility, monthly delivery meter data.
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