New FASB Interpretation 47 Requires Companies To Recognize Cleanup Costs Associated With Future Asset Retirement

One of the toughest accounting issues faced by a corporation is the proper estimation and tracking of its significant environmental remediation liabilities. In March 2005, the Financial Accounting Standards Board issued an interpretation of FASB Statement No. 143, “Accounting for Conditional Asset Retirement Obligations.” The new “clarifying” interpretation likely will precipitate a major change to many companies’ current accounting practices.