Advanced Accounting 10th Edition by Thomas Schaefer, Joe Ben Hoyle, Timothy Doupnik

Exercise 36

A city starts a solid waste landfill that it expects to fill to capacity gradually over a 10-year period.At the end of the first year, it is 8 percent filled.At the end of the second year, it is 19 percent filled.Currently, the cost of closure and post closure is estimated at $I million.None of this amount will be paid until the landfill has reached its capacity.
Which of the following is true for the Year 2 government-wide financial statements
a.Both expense and liability will be zero.
b.Both expense and liability will be $I 10.000.
c.Expense will be $110,000 and liability will be $190,000.
d.Expense will be $I00,000 and liability will be $200,000.