Case 10-4
Lack of Information
As indicated in the following memo, Lack of Information (LOI) has identified obligations to handle and dispose of asbestos upon retirement of several of its warehouses. Also as reflected in the memo, LOI has decided that it is not required to recognize any liabilities related to these obligations because it has asserted that the obligations are not probable or that it does not have sufficient information available.
Required:
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For each identified obligation, determine whether you agree with LOI’s conclusion and discuss the basis for your determination.
Copyright 2007 Deloitte Development LLC
All Rights Reserved.
Case 10-4: Lack of Information
MEMO
To:
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Date:
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2 of the 25 warehouses containing the asbestos reside in states that do not have laws in place requiring the special handling and disposal of the asbestos when the building is demolished or otherwise significantly renovated. However, LOI does have a legally binding contract to sell the warehouses in six months to a third party. The purchase/sales contract contains a standard provision allowing the buyer to require LOI to remove the asbestos prior to the date of the sale. LOI has previously sold warehouses to this same third party based on purchase/sales contracts containing similar provisions related to the removal of asbestos. In each of those transactions, the third party has never enforced the provision requiring
LOI to remove the asbestos from the warehouses. Based on this prior experience with the third party, LOI believes that there is a 90% probability that the third party will not enforce the provision in the current purchase/sales contract requiring LOI to remove the asbestos. Because it is not probable that LOI will be required to remove the asbestos, no asset retirement obligation needs to be recognized. At worst, there is not sufficient information (based on ASC 410-2025-10) to determine the fair value of the asset retirement obligation as it is currently uncertain as to whether LOI will be required to remove
The area of greatest concern and threat is Illinois Beach State Park which boarders the contamination site to the North. This is a concern as asbestos can cause cancer if the fibers are inhaled. Asbestos is less dangerous in water supplies although the site run-off at one point was 3 times the EPA’s limit. The EPA continues to monitor and improve the site. After the main site contamination were remediated, secondary excavation and capping projects have taken place over the years to continue to clean the site for future re-development as shown in the image below.
• TEC and AGL are partners carrying on a business under the name Southern Cross Energy.
In accordance with Reg. 21.901 Work Procedure Compliance (F)(1), wetting may not be required because to comply with Arkansas Asbestos Abatement Regulation (Reg. 21) would present a safety hazard. In the attached email response, you requested approval for dry removal due to a possibility of a safety hazard (fire). The email also contained a letter from EnergySolutions explaining that the hazard exist due to the possibility of the presence of sodium metal outside the system piping and components, as sodium reacts exothermically with water to form sodium hydroxide and hydrogen gas, which could pose a fire hazard. The Department grants approval for dry removal renovation operations prior to wetting. In addition, Reg. 21.901 (F)(2) requires in such instances that the
In 2009, the Affordable Care Act passed a provision that expanded Medicare coverage to include certain individuals with diseases caused by environmental health hazards (EHH). While there are many potential diseases caused by environmental health hazards, the legislation intended to cover people who developed asbestos related disease (ARD) following exposure in a vermiculite mine in Libby, Montana.1 The provision was included in the ACA with the help of Senator Baucus of Montana, who had a role in writing the health care law.2 The goal was to increase benefits for this new category of Medicare-eligible individuals. The three components of the legislation were the expansion of Medicare benefits, the development of a pilot program, and the initiation of grants to establish screening programs for the early detection of diseases caused by environmental health hazards.1
In discussing the negative impact that asbestos has had on the people of Libby, it is very easy to correlate how the asbestos exposure was so concentrated in a family. Another way that a household, people who occupy the same housing unit, could have large amount of asbestos exposure is simply working with the products that asbestos was used to create. This could happen to people who do not even live in Libby. Asbestos was used for very many different products, all in which every member of a household could be bringing it back to the house. A grandmother of a household may love to garden and help grow a beautiful yard. This could lead her to buying large amounts of vermiculite, a type of asbestos, and bringing it back to the home. The vermiculite is then used for fertilizer being spread throughout the land outside of the house. With wind blowing the asbestos could very easily be spread throughout the inside of the house. In order to properly lay the vermiculite the grandmother would come in contact with the material, covering herself and her clothes, all in which will be entering the home. The father of a household may work for an insulation company who uses asbestos to insulate houses. The father will be covered in this asbestos, and also probably have his own house insulated with this material. These are two more contributing factors of asbestos to the household. Another example could be that a child of the
The state laws requiring LOI to remove the asbestos create an obligation to remove the asbestos under ASC 410-20-15-2a for the ten warehouses that LOI will sell within five years. ASC 410-20-25-8b indicates that an asset retirement obligation is estimable if all of the following exist:
Accenture, LLP, “Employer”, and American Zurich Insurance Company, “Insurer”, by and through their undersigned attorneys, Tony D. Villeral, esq. and Franklin & Prokopik, P.C., hereby submit the District of Columbia does not have jurisdiction over the subject claim pursuant to D.C. Code § 32-1503.
In June 2015 Elizabeth Ann was affected with pneumonia and a cat scan confirmed that she had been contaminated with asbestos in her lungs. Her neighbor at the time while she resided at 3805 Paprika Way, in the City of Oceanside California decided to take down the ceiling referred to as popcorn ceiling from his residence. As it is known, such popcorn ceiling contains asbestos and must be removed professionally. When the owner took down the popcorn ceiling, he placed the debris between both his property and Elizabeth Ann’s rental property. It was the airborne particles that entered through her open window that infected her respiratory system.
The second important reason asbestos materials must be removed is safety. If you leave materials containing asbestos, whether next year, twenty years or hundred years, eventually the problem of the asbestos material will have to be addressed. The material can be merely covered, but eventually every home needs repair, and building supplies replaced. If the building burns, or collapses, there is a significant risk of exposure to the people who live in the home and to all the firefighters and paramedics. A good but tragic example is the many firefighters and other first
When it was known about the effects of the exposure to asbestos, the Clean Air Act of 1970(CAA) was put in place so we could have a national systems that will control the emissions of air pollutants. The CAA was put in place to stop on the release of emissions into the air. It would be soon to see that it would be something unachievable but it was revised to put in place a standard for the hazardous air pollutants. The standards of the emissions that could be released in the air had to be set at a high level due to the concern of the public 's health. Companies who did not follow these standards were subjected to criminal
At a minimum, if we have an asbestos registry at a local and state level, we can have a better understanding of how much toxic material remains in our communities. Firefighters and demolition workers care can wear the appropriate PPE when removing
Asbestos is a natural occurring airborne dust that can be extremely dangerous when inhaled. Found in high concentrations, sometimes as much as twelve percent, in vermiculite ore, asbestos is very apparent in this refining process. This all being said there were not many precautions in place to prevent such a catastrophe from occurring. One interesting yet devastating fact about asbestos is once it is inhaled into the lungs it can never be expelled other than by means or surgery. Once inhaled it becomes trapped in your lungs, at which point your lungs begin to cover over the asbestos, leaving it permanently trapped in the capillaries of your lungs. An extreme build up of this can result in asbestosis, a hardening of the lungs due to inhaled asbestos. This is what many of the workers contracted and were never able to fully recover. The surgery to help undo this damage was both costly and often unsuccessful. One of the executives at the plant is filmed in the deposition saying he had in fact had asbestos removed from his lungs after learning about the dangers of the mill. This is a perfect example of the sociological term Two-Tier system of Medical Care. This system makes it possible for these wealthier high up executives to receive the proper medical treatment they needed in order to remove the extremely deadly asbestos from their lungs, while the average mill worker who needed the surgrery much more could not afford such a procedure.
Exposure to asbestos can cause life-threatening illnesses such as mesothelioma, lung cancer, pleural calcification, and pulmonary fibrosis. Asbestos is known for it's incredible strength and fire resistance. When asbestos fibers enter the body by inhalation or ingestion, they settle in vulnerable tissues, inflaming the surrounding area and leads to health problems. Military veterans, Construction Workers, and Firefighters are faced with increased risks for asbestos exposure; affecting their immune system, respiratory system and liver (Sokolove, 2015).
There are many dangers associated with exposure to asbestos. The results of this exposure are severe and sometimes fatal. The environment contains fewer amounts of Asbestos, but the majority of the problems occur from professional hazards. People working in the construction industry, especially those using materials containing asbestos have a high exposure to asbestos. Asbestos dust and fibers cause significant health problems when inhaled in larger volumes over an extended period of time. That’s why most states in the US and Europe have made laws that require testing of buildings for asbestos before demolishing them.
In this way, authorized asbestos abatement pros are your most logical option for appropriate and exhaustive extraction of the possibly unsafe materials. These experts secure themselves with HEPA channel respirators, coveralls, elastic boots, elastic gloves, and eye assurance. They additionally stay safe by not utilizing any of the power as a part of that space since they need to wet down the asbestos to counteract fiber scattering as it is being