The Asbestos Must Go, But Where Do We Charge It?
The FASB’s Emerging Issues Task Force (EITF) considered the question of how the costs incurred in removing asbestos from buildings should be treated (Issue 89–13). This is a widespread issue because studies indicate that some 20% of buildings in the United States contain asbestos. The EITF considered the following specific questions: 1. If a company purchases a building with a known asbestos problem, should the removal costs be expensed or capitalized?
2. If a company discovers an asbestos problem in a building it already owns, should the removal costs be expensed or capitalized?
3. If you had been on the task force, how would you have ruled on these two questions? Why?