The faithful representation of electrical energy sale and purchase agreements under International accounting standards/International financial reporting standards

This article aims at giving a contribution to the issue of accounting electrical energy sale and purchase agreements in accordance with the faithful representation principle. To this end it must be ascertained whether electrical energy is bought/sold for an industrial use exclusively, so that the relevant transaction will be accounted as a normal purchase/sale, or through the lease of the relevant production plant, which would require the supply contract to be accounted in compliance with Ias 17 “Leasing”. Alternatively, it must also be ascertained whether the relevant party is implementing financial trading strategies, as in such hypothesis the supply contract is to be accounted as a financial instrument according to Ifrs 9/ Ias 39 “Financial Instruments”. Finally, the modalities used by a number of companies listed on European regulated markets to account such kind of contracts will be analyzed.