This Subtopic does not discourage entities from disclosing additional information that they believe will further users' understanding of the entity's financial statements.
The disclosure requirements of Subtopic 275-10 also apply to environmental remediation liabilities. Example 1 (paragraph
410-30-55-7) illustrates the application of those disclosure requirements.
With respect to recorded accruals for environmental remediation loss contingencies and assets for third-party recoveries related to environmental remediation obligations, financial statements shall disclose if any portion of the accrued obligation is discounted, the undiscounted amount of the obligation, and the discount rate used in the present-value determinations.
Uncertainties associated with environmental remediation loss contingencies are pervasive, and they often result in wide ranges of reasonably possible losses with respect to such contingencies. Further, resolution of the uncertainties and the cash-flow effects of the loss contingencies often occur over a span of many years. Accordingly, this Subtopic encourages, but does not require, additional specific disclosures with respect to environmental remediation loss contingencies that would be useful to further users' understanding of the entity's financial statements.
Financial statements may include a contingency conclusion that addresses the estimated total unrecognized exposure to environmental remediation and other loss contingencies. Such contingency conclusions may state, for example, that \"management believes that the outcome of these uncertainties should not have [or \"may have\"] a material adverse effect on the financial condition, cash flows, or operating results of the entity.\" Alternatively, the disclosure may indicate that the adverse effect could be material to a particular financial statement or to results and cash flows of a quarterly or annual reporting period.
Also, the assertion that the outcome should not have a material adverse effect must be supportable. If the entity is unable to estimate the maximum end of the range of possible outcomes, it may be difficult to support an assertion that the outcome should not have a material adverse effect.
Entities may wish to provide a description of the general applicability and impact of environmental laws and regulations upon their business and how the existence of such laws and regulations may give rise to loss contingencies for future environmental remediation. Such disclosures often acknowledge the uncertainty of the effect of possible future changes to environmental laws and their application, and they are frequently made on an aggregated basis, considering the entity's total exposures for all its environmental sites.