Use the following to answer questions 24 and 25:
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.
[QUESTION]
-On government-wide financial statements, which of the following are the appropriate amounts to present in the financial statements for 2018?
A) Both expense and liability will be zero.
B) Expense will be $300,000 and liability will be $600,000.
C) Expense will be $600,000 and liability will be $600,000.
D) Expense will be $675,000 and liability will be $600,000.
E) Expense will be $375,000 and liability will be $675,000.

Question

Quizplus · Accepted Answer

The expense for 2018 is calculated based on the increase in the percentage of landfill usage from 2017 to 2018 (45% - 20% = 25% of $1.5 million = $375,000). The liability at the end of 2018 is based on the total percentage of landfill usage (45% of $1.5 million = $675,000).

Use the Following to Answer Questions 24 and 25