Coal, Inc. has paid $10 million to a waste disposal company to clean a site originally contaminated by Coal, Inc. through its operations and to assume its environmental liability (currently recorded as an $10 million liability on Coal's financial statements). State regulators have signed off on the liability transfer and now look to the waste disposal company as the responsible party for the cleanup.

Question 1

Identify an appropriate way for Coal, Inc. to remove the environmental liability from its financial statements. When should it remove the liability as per the GAAP or IFRS?