In 2018, a city opens a municipal landfill, which it will account for in an enterprise fund. It estimates capacity to be 6 million cubic feet and usable life to be 20 years. To close the landfill, the municipality expects to incur labor, material, and equipment costs of $4 million. Thereafter, it expects to incur an additional $6 million of cost to monitor and maintain the site.
Required
1. In 2018, the city uses 300,000 cubic feet of the landfill. Prepare the journal entry to record the expense for closure and post-closure care.
2. In 2019, it again uses 300,000 cubic feet of the landfill. It revises its estimate of available volume to 5.8 million cubic feet and closure and post-closure costs to $10.2 million. Prepare the journal entry to record the expense for closure and post-closure care.
3. Suppose the city accounts for the landfill in the general fund. How would the above entries for 2018 and 2019 differ?