A city starts a solid waste landfill that it expects to fill to capacity gradually over a 8-year period. At the end of the first year, it is 10 percent filled. At the end of the second year, it is 23 percent filled. Currently, the cost of closure and postclosure is estimated at $1 million. None of this amount will be paid until the landfill has reached its capacity.

Which of the following is true for the Year 2 government-wide financial statements?

Multiple Choice

• Both expense and liability will be zero.

• Expense will be $120,000 and liability will be $240,000.

• Expense will be $130,000 and liability will be $230,000.

• Both expense and liability will be $130,000.