Between 1957 and 1977 Westinghouse Electric Corp. used PCBs in the manufacture of elec¬ trical capacitors at its plant in Bloomington, Indiana. A federal consent-decree has ordered the company to be prepared to build an incinerator in the future to destroy the PCB-contaminated materials. The decree, with which Westinghouse agrees, contains a clause stating that if Westinghouse’s net worth (balance sheet assets less balance sheet liabilities) drops to $1.9 bil¬ lion, the company is required to place in escrow (set aside) $325 million to ensure that funds will be available if and when the incinerator is built. A recent pronouncement from the FASB requires that Westinghouse as well as other com¬ panies change the way in which they account for certain employee retirement costs. After adopting this mandated change, Westinghouse’s net worth plunged to $1.85 billion, which is below the dollar amount indicated in the consent-decree. According to the agreement, there¬ fore, Westinghouse should transfer $325 million to an escrow account. Westinghouse has refused to make the payment, however, claiming that the reduction in net worth was due to a new accounting standard not in effect at the time the agreement was signed. 636 Part 4 Liabilities and Stockholders’ Equity: A Closer Look REQUIRED: Discuss this issue from the perspective of the following:

a. An executive of Westinghouse.

b. A representative of the federal government.

c. A resident of Bloomington, Indiana