Question

Use the Internet to research companies who have potential (1) pollution problems, (2) environmental-disposal problems, or (3) demolition issues (specifically big-box stores). Next, analyze the current requirements of GAAP for your chosen issue and discuss the efficacy of the required accounting and/or disclosure in informing investors of material information. Provide support for the status quo or additional reporting.

Answer 1

s a Chief Finanacial Officer of a big box Store that has potential pollution, environmental disposal or demilitionproblems will has to be routenly updates environmental cleanupcosts and estimates them with colleagues of the amanagement team.Heshould always used same approach to estimate which is used intiallyestimates costs. But if its is necessary to change the method usedto estimate and update environment cleanup cost, than he shuldchange it accordingly with proper documentary proof.

• for cost yet not completed, use industry based constructionbased indices
• for completed enviromental cleanup, use reduced cost to reflectwork that has completed
• for additional environment cleanup that give volume to project,always provide update estimates

The CFO should record an estimated cumulative liability for thecleanup cost, based on the information furnished by fieldoffficer.

After the criteria has been verified the CFO will work with theto prepare the estimates of all demolition problems to enter in tothe accounting system. The CFO will record the cost estimates inappropriate Assets and Miscelleneous Account Fund.

he should communicate his resech to collegue by disclosingfollowing points:

• Source of cleanup requiremets
• method os assigning cost
• nature of estimates and disclosure of possible changes due toinflation and other uncontroled activities
• if the amount is not reasonably estimates then its supportingshould be disclosed

Advantage of this statement will enhance comparability offinanacial statement among governments projects, public benefitscooperations. Maintain these cost in appropriate manner willincrese the public image of company.

But if the the decision or estimated values are not reliable,relevant and comparable, then it will effect the Financialstatement badly.