A city starts a solid waste landfill that it expects to fill to capacity gradually over a 39-year period. At the end of the first year, it is 4 percent filled. At the end of the second year, it is 11 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?

a. Expense will be $60,000 and liability will be $120,000.

b. Both expense and liability will be $70,000.

c. Both expense and liability will be zero.

d. Expense will be $70,000 and liability will be $110,000.