Pollution remediation costs:

Question

Quizplus · Accepted Answer

Pollution remediation costs are to be accrued as a liability in the basic financial statements. This is because it represents the obligation of the entity to remediate the pollution caused by its activities in the past. Accruing it as a liability ensures that it is appropriately recognized in the financial statements, and not understated or overstated. Option A is incorrect as recording these costs as expenses from current resources would not capture the true financial position of the entity. Option C is also incorrect as the state or local government is responsible for any pollution that occurs within its jurisdiction, even if it did not operate the site. Option D is incorrect as only option B is correct.

Pollution Remediation Costs