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Many reporting entities with significant environmental expenditures include an environmental accounting policy footnote, outlining both their policies with regard to the classification of expenditures between capital and operating expense, and their processes for determining the amount of environmental remediation obligations to accrue. ASC 235-10-50-3 requires disclosure when environmental matters are material.
Figure FSP 11-3 includes an example disclosure of an environmental remediation costs accounting policy footnote.
Figure FSP 11-3
Sample disclosure — environmental remediation costs
FSP Corp accrues for losses associated with environmental remediation obligations when such losses are probable and reasonably estimable. Accruals for estimated losses from environmental remediation obligations generally are recognized no later than completion of the remedial feasibility study. Such accruals are adjusted as further information develops or circumstances change. Costs of future expenditures for environmental remediation obligations are not discounted to their present value. Recoveries of environmental remediation costs from other parties are recorded as assets when their receipt is deemed probable. Consolidated provisions made in 20X7 for environmental liabilities were $10 million ($11 million in 20X6), and the balance sheet reflects accumulated liabilities of $70 million and $75 million as of December 31, 20X7, and 20X6, respectively.

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