The Company believes that there are no compliance issues associated with applicable environmental laws and regulations that would have a material adverse effect on the Company. The Company is also remediating environmental contamination resulting from past industrial activity at certain of its sites. Expenditures for remediation and environmental liabilities were $20 million in 2013, $14 million in 2012 and $25 million in 2011, and are estimated at $117 million in the aggregate for the years 2014 through 2018. These amounts do not consider potential recoveries from other parties. The Company has taken an active role in identifying and providing for these costs and, in management's opinion, the liabilities for all environmental matters, which are probable and reasonably estimable, have been accrued and totaled $213 million at December 31, 2013. Although it is not possible to predict with certainty the outcome of these environmental matters, or the ultimate costs of remediation, management does not believe that any reasonably possible expenditures that may be incurred in excess of the liabilities accrued should exceed $84 million in the aggregate. Management also does not believe that these expenditures should have a material adverse effect on the Company's financial position, results of operations, liquidity or capital resources for any year. a. How does Merck account for environmental liabilities that are probable and reasonably estimable? At December 31, 2013, how much were these liabilities? b. How does Merck account for environmental liabilities that are reasonably possible? At December 31, 2013, how much were these liabilities?
The Company believes that there are no compliance issues associated with applicable environmental laws and regulations that would have a material adverse effect on the Company. The Company is also remediating environmental contamination resulting from past industrial activity at certain of its sites. Expenditures for remediation and environmental liabilities were $20 million in 2013, $14 million in 2012 and $25 million in 2011, and are estimated at $117 million in the aggregate for the years 2014 through 2018. These amounts do not consider potential recoveries from other parties. The Company has taken an active role in identifying and providing for these costs and, in management's opinion, the liabilities for all environmental matters, which are probable and reasonably estimable, have been accrued and totaled $213 million at December 31, 2013. Although it is not possible to predict with certainty the outcome of these environmental matters, or the ultimate costs of remediation, management does not believe that any reasonably possible expenditures that may be incurred in excess of the liabilities accrued should exceed $84 million in the aggregate. Management also does not believe that these expenditures should have a material adverse effect on the Company's financial position, results of operations, liquidity or capital resources for any year. a. How does Merck account for environmental liabilities that are probable and reasonably estimable? At December 31, 2013, how much were these liabilities? b. How does Merck account for environmental liabilities that are reasonably possible? At December 31, 2013, how much were these liabilities?
Chapter7: Corporations: Reorganizations
Section: Chapter Questions
Problem 30P
Related questions
Question
Transcribed Image Text:The Company believes that there are no compliance issues associated with applicable environmental
laws and regulations that would have a material adverse effect on the Company. The Company is also
remediating environmental contamination resulting from past industrial activity at certain of its sites.
Expenditures for remediation and environmental liabilities were $20 million in 2013, $14 million in
2012 and $25 million in 2011, and are estimated at $117 million in the aggregate for the years 2014
through 2018. These amounts do not consider potential recoveries from other parties. The Company
has taken an active role in identifying and providing for these costs and, in management's opinion, the
liabilities for all environmental matters, which are probable and reasonably estimable, have been
accrued and totaled $213 million at December 31, 2013. Although it is not possible to predict with
certainty the outcome of these environmental matters, or the ultimate costs of remediation,
management does not believe that any reasonably possible expenditures that may be incurred in
excess of the liabilities accrued should exceed $84 million in the aggregate. Management also does
not believe that these expenditures should have a material adverse effect on the Company's financial
position, results of operations, liquidity or capital resources for any year.
-- ---- .
---.----- .
a. How does Merck account for environmental liabilities that are probable and reasonably estimable?
At December 31, 2013, how much were these liabilities?
b. How does Merck account for environmental liabilities that are reasonably possible? At December
31, 2013, how much were these liabilities?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Financial Reporting, Financial Statement Analysis…
Finance
ISBN:
9781285190907
Author:
James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:
Cengage Learning
Auditing: A Risk Based-Approach (MindTap Course L…
Accounting
ISBN:
9781337619455
Author:
Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:
Cengage Learning
Financial Reporting, Financial Statement Analysis…
Finance
ISBN:
9781285190907
Author:
James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:
Cengage Learning
Auditing: A Risk Based-Approach (MindTap Course L…
Accounting
ISBN:
9781337619455
Author:
Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:
Cengage Learning
Business Its Legal Ethical & Global Environment
Accounting
ISBN:
9781305224414
Author:
JENNINGS
Publisher:
Cengage
Auditing: A Risk Based-Approach to Conducting a Q…
Accounting
ISBN:
9781305080577
Author:
Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:
South-Western College Pub