Under Private Entity GAAP, the cost for environmental clean-up costs at the end of an asset's useful life are
A)Expensed as incurred
B)Recognized only if they represent a legal obligation.
C)Are capitalized once they have become apparent.
D)None of the above

Question

Quizplus · Accepted Answer

Under Private Entity GAAP, environmental clean-up costs at the end of an asset's useful life should be recognized only if they represent a legal obligation. This means that if there are environmental obligations that arise from existing laws or regulations, or from contracts or other agreements, they must be recognized as a liability even though the timing or amount of the cost may be uncertain. Otherwise, the cost should not be recognized until it becomes certain and measurable.

Under Private Entity GAAP, the Cost for Environmental Clean-Up Costs