Sale of Renewable Energy Certificates (RECs)
Recording the sale of generated RECs to a third party (e.g., a utility needing to meet Renewable Portfolio Standards).
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Accounts Receivable | Asset (+) | 60,000.00 | - |
| Revenue - REC Sales | Revenue (+) | - | 60,000.00 |
| Cost of Goods Sold - RECs | Expense (+) | 45,000.00 | - |
| Inventory - RECs | Asset (-) | - | 45,000.00 |
💡 Accountant's Note
When RECs are sold independently of electricity (unbundled), revenue is recognized upon the transfer of control (usually when RECs are transferred in the tracking registry). The carrying value of the RECs is expensed as COGS.
Practitioner & Systems Framework
💻 ERP Architecture
Requires a standard sales order and fulfillment process in the ERP. The 'shipment' is the transfer of the digital certificate in the registry.
⚠️ Audit Flags
Verification of the transfer of control via the tracking registry (proof of delivery). Testing of the profit margin to ensure inventory was appropriately costed.
📄 Required Documentation
REC purchase and sale agreement (REC PSA), registry transfer confirmation, sales invoice.
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