In the liabilities section of its 2002 balance sheet, Wachovia Corporation reported “noninterest- bearing deposits” of over \($44\) billion . Wachovia is a very large banking company. In the liabilities section of its 2002 balance sheet, Newmont Mining Corporation reported “reclamation and remediation liabilities” of more than \($302\) million . Newmont Mining is involved in gold mining and refining activities. In the accrued liabilities reported on its 2002 balance sheet, Conoco Phillips included \($1.7\) billion for “accrued dismantlement, removal, and environmental costs.”

Required:

a. For each of the preceding liabilities, write a brief explanation of what you believe the nature of the liability to be and how the company will pay it off. To develop your answers, think about the nature of the industry in which each of the companies operates.

b. Of the three liabilities described, which do you think poses the most risk for the company? In other words, for which liability are actual costs most likely to exceed the liability reported on the balance sheet? Uncertainty creates risk.