Green Hydrogen - Inventory Cost Allocation
Allocating the direct costs (renewable power, purified water) and overhead (electrolyzer depreciation) into the cost of green hydrogen inventory.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Inventory - Green Hydrogen Gas | Asset (+) | 85,000.00 | - |
| Utility Expense - Renewable Power | Expense (-) | - | 60,000.00 |
| Utility Expense - Water | Expense (-) | - | 5,000.00 |
| Depreciation Expense (Overhead Allocation) | Expense (-) | - | 20,000.00 |
💡 Accountant's Note
Green hydrogen is an inventoried manufactured good. Under standard absorption costing (IAS 2 / ASC 330), direct materials (water), direct energy (power), and a portion of fixed manufacturing overhead (depreciation of the facility) must be capitalized into the inventory cost until sold.
Practitioner & Systems Framework
💻 ERP Architecture
Tracked in the ERP manufacturing/process costing module. Requires a standard routing that consumes MWh of electricity and liters of water per kg of hydrogen produced.
⚠️ Audit Flags
Testing the overhead allocation rate. Auditors ensure that power used for non-production purposes (facility lighting) is expensed, while direct production power is capitalized to inventory.
📄 Required Documentation
Bill of Materials (BOM) for hydrogen, meter readings for power/water, standard costing models.
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