AASB 137 - Provisions, Contingent Liabilities and Contingent Assets - July 2004
Example 2A Contaminated Land — LegislatiExample 2A Contaminated Land — Legislation Virtually Certain to be Enacted
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Example 2A Contaminated Land – Legislation Virtually Certain to be Enacted
An entity in the oil industry causes contamination but cleans up only when required to do so under the laws of the particular country in which it operates. One country in which it operates has had no legislation requiring cleaning up, and the entity has been contaminating land in that country for several years. At 31 December 2000, it is virtually certain that a draft law requiring a clean‑up of land already contaminated will be enacted shortly after the year‑end.
Present obligation as a result of a past obligating event – The obligating event is the contamination of the land because of the virtual certainty of legislation requiring cleaning up.
An outflow of resources embodying economic benefits in settlement – Probable.
Conclusion – A provision is recognised for the best estimate of the costs of the clean-up (see paragraphs 14 and 22).