Question

Environmental remediation costs have become increasingly prevalent in the past few decades. Conduct research in the Accounting Standards Codification to address the following requirements. Also, please be sure to provide a citation to the appropriate codification section (using the full paragraph number, i.e. ASC XXX-XX-XX).

1. Briefly explain the following terms:
   1. Environmental remediation liability
   2. Superfund
   3. Potential responsible parties

Answer 1

a)An environmental remediation liability is a type of contingent liability that arises, from federal, state, and local environmental regulations related to environmental contamination in soil, sediment, groundwater and surface water. These regulations often create a cleanup standard that defines the level of contamination at or above which remedial action must be taken. For example, governmental regulations may define the allowable amount of contamination in drinking water before remediation is required.

In a manner consistent with the guidance in ASC 450-20, an environmental remediation liability should be recognized when it is probable that such a liability has been incurred and the amount of the liability can be reasonably estimated. The concepts of “probable” and “reasonably estimable” are based on the framework outlined in ASC 450-20. ASC 410-30 provides additional guidance on how to apply these concepts in the context of some of the unique characteristics of the environmental remediation statutes and regulations in the United States.

Specifically, in accordance with regulation, the following transactions and activities are outside the scope of ASC 410-30:
• Environmental contamination incurred in the normal operation of a long-lived asset
• Pollution control costs with respect to current operations .Environmental remediation actions that are undertaken at the sole discretion of management
and that are not induced by the threat, by governments or other parties, of litigation or of assertion of a claim or an assessment.
• Recognizing liabilities of insurance entities for unpaid claims.
• Natural resource damages

B) Superfunds

Superfund provide fund to clean up uncontrolled or abandoned hazardous-waste sites as well as accidents, spills, and other emergency releases of pollutants and contaminants into the environment. The EPA is authorized to (1) identify the parties that are potentially responsible for the release of pollutants and contaminants and (2) request their cooperation in the cleanup .EPA will assume the lead role in conducting the cleanup effort when they cant find a corporation. Once the cleanup effort has been completed, the EPA can recover costs from financially viable individuals and companies by using various enforcement tools.

C) Potential responsible parties:EPA determine liability by matching wastes found at the site with parties that have contributed wastes to the site.Parties includes individual or organizational entity who are potentially responsible for contamination problems.It include: a.Current owners or operators of sites at which hazardous substances have been disposed of or abandoned. b. Previous owners or operators of sites at the time of disposal of hazardous substances

c. Parties that “arranged for disposal” of hazardous substances found at the sites
d. Parties that transported hazardous substances to a site.