Question

for the purpose of government-wide financial statements, the cost of cleaning up a government-owned landfill and closing the landfill multiple choice is not recognized until the costs are actually incurred. is accrued and amortized over the expected useful life of the landfill. is accrued on a pro-rated basis each period based on how full the landfill is. is accrued in full at the time the costs become estimable. is treated as an encumbrance at the time it become estimable, and then as an expenditure when it is actually paid.

Answer 1

In government-wide financial statements, the costs for cleaning up and closing a landfill are accrued in full once they become estimable, in line with accrual accounting principles.

Step-by-step explanation:

For the purpose of government-wide financial statements, the correct approach to accounting for the costs of cleaning up a government-owned landfill and closing the landfill is to accrue the costs in full at the time the costs become estimable. This method is based on the principle of recognizing the liability when the cost can be reasonably estimated and the event that causes the obligation has occurred, which for landfills is typically when the site is operational or when it reaches capacity. This ensures the cost is matched with the periods benefiting from the landfill's use, in accordance with accrual accounting principles.

Answer 2

For the purpose of government-wide financial statements, the cost of cleaning up a government-owned landfill and closing the landfill is "is accrued on a pro-rated basis each period based on how full the landfill is."

This approach reflects the matching principle in accounting, which states that expenses should be recognized in the period in which they are incurred or when they contribute to revenue generation, rather than when they are paid. In the case of a landfill, the cost of cleanup and closure is gradually incurred as the landfill is filled up.

Therefore, governments typically accrue these costs proportionally over the period during which the landfill is in use, based on its capacity and usage rate. This method ensures that the financial statements accurately reflect the liability as it grows, rather than waiting until the costs are actually incurred or when they become estimable in full.