Question

BC County opens a solid waste landfill that it expects to fill to capacity gradually over a 40-year period. At the end of the first year, it is 6 percent filled. At the end of the second year, it is 15 percent filled. Currently, the cost of closure and postclosure is estimated at $1 million. None of this amount will be paid until the landfill has reached 90 percent of its capacity.

Required:
What is true for the Year 2 government-wide financial statement?

Answer 1

Answer:

Expense will be $90,000 and liability will be $150,000

Explanation:

Year 2 liability is :

$1,000,000 * 15% = $150,000

Year 1 liability is :

$1,000,000 * 6% = $60,000

Expense for year 2 :

Year 2 liability - Year 1 liability

$150,000 - $60,000 = $90,000