Question

In the liabilities section of its 2013 balance sheet, Bank of America reported "noninterest-bearing deposits" in U.S. offices of over $373 million. Bank of America is a very large banking company.

In the liabilities section of its 2013 balance sheet, Newmont Mining Corporation reported "reclamation and remediation liabilities" of more than $1.5 billion.scuss what you believe the nature of these liabilities are and how each company might pay them off. In thinking about your response, think about the industry that each company operates in.

Answer 1

"Non interest-bearing deposits"

A checking account which does not earn interest on money in account. A non interest bearing account is often used as a basic or starter checking account mostly for children or teen agers who are storing small amount of money. Another advantage of these accounts is there are no charges or very limited charges payable by account holders.

Non-interest bearing deposit liabilities are an integral part of a Bank of America fund’s portfolio. These consumer and business checking accounts provide a relatively stable source of investable funds which are considered among a bank’s core deposits.

Bank of America can use such funds to investment and earn higher Interest and increase revenue. Bank need to pay off only principal amount as there is no extra interest needs to pay to account holders.  

"Reclamation and Remediation liabilities"

Asset retirement obligations are recognized when incurred and recorded as liabilities at fair value. The liability is accreted over time through periodic charges to earnings. In addition, the asset retirement cost is capitalized as part of the asset’s carrying value and amortized over the life of the related asset. Reclamation costs are periodically adjusted to reflect changes in the estimated present value resulting from the passage of time and revisions to the estimates of either the timing or amount.

Future remediation costs for inactive mines are accrued based on management’s best estimate at the end of each period of the undiscounted costs expected to be incurred. Such cost estimates include, where applicable, ongoing care, maintenance and monitoring costs. Changes in estimates are reflected in earnings in the period an estimate is revised.

Accounting for reclamation and remediation obligations requires management to make estimates unique to each mining operation of the future costs we will incur to complete the reclamation and remediation work required to comply with existing laws and regulations. Actual costs incurred in future periods could differ from amounts estimated. Additionally, future changes to environmental laws and regulations could increase the extent of reclamation and remediation work required. Any such increases in future costs could materially impact the amounts charged to earnings for reclamation and remediation.

The Newmont’s Mining Corporation's mining and exploration activities are subject to various laws and regulations governing the protection of the environment