Question

A city starts a solid waste landfill during 2017. When the landfill was opened the city estimated that it would fill to capacity within 5 years and that the cost to cover the facility would be $1.5 million which will not be paid until the facility is closed. At the end of 2017, the facility was 20% full, and at the end of 2018 the facility was 45% full. If the landfill is judged to be a governmental fund, what liability is reported on the fund financial statements at the end of 2018

Answer 1

The interpretation of the particular question is outlined in the following segment on the clarification.

Step-by-step explanation:

The facility was indeed 20 percent full by either the end of December 2017 therefore the 3,00,000 would still have been recognized as an expenditure.

The facility also seems to be 45 percent complete at either the end of 2018, meaning that the 3,75,000 will have been accepted as expenditures,

⇒
`1,500,000* (45 \ percent-20 \ percent)`

By most of the end of the decade, the financial sheet provides a snapshot 6,75,000 although this debt would be,

⇒
`1,500,000* 45 \ percent`

So 3,75,000 should have been shown as the cost of the rest in the financial information for 2018, as well as 6,75,000 would have been shown as contractual obligations.