A worked year-end for 2026 imports: the accrual on import, the CBAM left in closing stock, and the liability nobody has paid yet.
Under IFRS the CBAM cost of imported goods reads most naturally as a cost of purchase under IAS 2, which includes import duties and other non-recoverable taxes, so it follows the goods into inventory and reaches the income statement only when they are sold. For an illustrative steel importer with 8,000 tonnes of 2026 imports and 344,192.5 euros of CBAM, holding 1,500 tonnes at year end, that puts 67,710 euros of CBAM in closing inventory, and 2026 gross profit is 67,710 higher than if the whole cost were expensed.
Worked in full in The CBAM Compliance Handbook by Julian R. Sterling, with every figure reproduced in a free workbook.See the book on Amazon →
The definitive period of the CBAM Regulation, (EU) 2023/956, began on 1 January 2026. Goods imported during 2026 create an obligation to surrender certificates, but certificates cannot be bought before 1 February 2027 and the 2026 obligation is surrendered by 30 September 2027. So at 31 December 2026 an importer has a full year of CBAM cost and has paid none of it. Two questions follow for the year-end accounts: where the cost sits, and how big the liability is.
IFRS has no standard written for CBAM. IAS 2, paragraph 11, says the costs of purchase of inventories comprise the purchase price, import duties and other taxes (other than those subsequently recoverable by the entity from the taxing authorities), and transport, handling and other directly attributable costs. CBAM is not a customs duty, but it is a non-recoverable charge that arises because the goods were imported. Treated as part of the cost of purchase, it is capitalised. Agree the policy with your auditor before the first year end; the arithmetic below is the same whichever way the judgement falls, only its timing changes.
| Input | Value |
|---|---|
| Imports, tonnes a quarter | 2,000 |
| Verified embedded emissions, tCO2e a tonne | 1.90 |
| Product benchmark, tCO2e a tonne (illustrative) | 1.37 |
| Free allocation retained, 2026 | 97.5% |
| Certificate price, Q1 to Q4 (illustrative) | 72 / 75 / 78 / 80 |
| Purchase price / selling price, a tonne | 600 / 720 |
| Tonnes sold in 2026, first in first out | 6,500 |
The certificates owed a tonne follow the free allocation adjustment: 1.90 − 1.37 × 97.5% = 0.56425. Why the benchmark, not the 2.5 per cent shortcut, is the right base is worked in how the CBAM free allocation adjustment is calculated. For 2026 each quarter's imports are priced at that quarter's average, as set out in how the CBAM certificate price is calculated; the four prices here are illustrative.
Step 1: CBAM cost by quarter. Each quarter's 2,000 tonnes owe 1,128.5 certificates.
| Quarter | Price | Certificates | CBAM cost | CBAM a tonne | Unit cost of stock |
|---|---|---|---|---|---|
| Q1 | 72.00 | 1,128.5 | 81,252.0 | 40.63 | 640.63 |
| Q2 | 75.00 | 1,128.5 | 84,637.5 | 42.32 | 642.32 |
| Q3 | 78.00 | 1,128.5 | 88,023.0 | 44.01 | 644.01 |
| Q4 | 80.00 | 1,128.5 | 90,280.0 | 45.14 | 645.14 |
| 2026 | 76.25 | 4,514.0 | 344,192.5 | 43.02 |
Step 2: the entry on import. Each quarter, debit inventory with the CBAM cost and credit an accrued CBAM liability. The unit cost of a Q4 tonne becomes 600 + 45.14 = 645.14.
CBAM per tonne = (SEE − benchmark × share retained) × quarter's price
Q4: (1.90 − 1.37 × 97.5%) × 80.00 = 0.56425 × 80.00 = 45.14
In Excel: =(SEE-Bench*Retained)*Price, then =Tonnes*that for the accrual
Step 3: split at year end. Under first in, first out the 1,500 tonnes left at 31 December came in during Q4, so they carry 1,500 × 45.14 = 67,710.0 of CBAM. The other 276,482.5 has gone through cost of sales.
Step 4: the liability. All 344,192.5 is owed at 31 December, whether or not the goods have been sold. Capitalisation changes where the debit sits, not the size of the credit.
| Line | Capitalised | Expensed |
|---|---|---|
| Revenue, 6,500 t at 720 | 4,680,000 | 4,680,000 |
| Cost of goods, 6,500 t at 600 | 3,900,000 | 3,900,000 |
| CBAM in the income statement | 276,482.5 | 344,192.5 |
| Gross profit | 503,517.5 | 435,807.5 |
| Gross margin | 10.76% | 9.31% |
| Closing inventory, 1,500 t | 967,710.0 | 900,000 |
| Accrued CBAM liability | 344,192.5 | 344,192.5 |
The difference is pure timing: the 67,710 reaches the income statement in 2027 when the stock is sold. Either way CBAM costs real margin. Without it gross margin would be 16.67 per cent; with the 2026 obligation it is 10.76 capitalised or 9.31 expensed, in the first and cheapest year of the phase-in.
| Variant | CBAM in inventory | Liability at 31 December |
|---|---|---|
| No closing stock | 0.0 | 344,192.5 |
| 1,500 t closing stock, base case | 67,710.0 | 344,192.5 |
| 3,000 t closing stock (Q4 and part of Q3) | 134,291.5 | 344,192.5 |
| Q4 price estimated at 75.00 | 63,478.1 | 338,550.0 |
| Q4 price estimated at 85.00 | 71,941.9 | 349,835.0 |
The fourth-quarter price is not published until after the quarter ends, so a close run before then has to estimate it. Each 5 euros of error moves the liability by 5,642.5, but only 1,410.6 of it reaches 2026 profit under capitalisation, because three-quarters of the Q4 goods are still in stock. If the accounts are signed after the price is out, use the published figure.
Accrue CBAM on every import at the quarter's price, add it to the cost of the goods, and let it leave inventory with them. On these figures 67,710 of a 344,192.5 obligation is still in stock at year end, and the liability is the full amount either way. The book's cash calendar for 2027, when the 2026 obligation is paid while 2027 holdings are being built, is in the free workbook for this case.
When the goods are imported, not when certificates are bought. Certificates for 2026 imports cannot be bought before 1 February 2027, yet the obligation arises with each import. In the worked case, 8,000 tonnes imported in 2026 create a liability of 344,192.5 euros at 31 December 2026, although nothing has been paid.
Each quarter's imports at that quarter's published certificate price, the average of EU ETS auction prices in the quarter. The fourth-quarter price comes out after the quarter ends, so an early close estimates it: each 5 euros of error moves the illustrative liability by 5,642.5 euros.
No, only its timing. In the illustrative case 67,710 euros of the 344,192.5 obligation sits in closing inventory at the end of 2026 and reaches cost of sales in 2027. Gross margin falls from 16.67 per cent without CBAM to 10.76 per cent with it capitalised, and 9.31 per cent if it were all expensed.
This article is one calculation from The CBAM Compliance Handbook. The book takes the same case from first principles to the decision, chapter by chapter, and every figure it prints is a live formula in the free companion workbooks.
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