Waste Management 2008 Annual Report Download - page 58
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Please find page 58 of the 2008 Waste Management annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.with the criteria that must be evaluated in determining if a tax position has been effectively settled and should be
recognized as a tax benefit.
Refer to Note 2 of our Consolidated Financial Statements for additional information related to the impact of
the implementation of these new accounting pronouncements on our results of operations and financial position.
Reclassification of Segment Information — During the second quarter of 2008, we moved certain Canadian
business operations from the Western Group to the Midwest Group to facilitate improved business execution. We
have reflected the impact of this change for all periods presented to provide financial information that consistently
reflects our current approach to managing our operations.
Critical Accounting Estimates and Assumptions
In preparing our financial statements, we make numerous estimates and assumptions that affect the accounting
for and recognition and disclosure of assets, liabilities, stockholders’ equity, revenues and expenses. We must make
these estimates and assumptions because certain information that we use is dependent on future events, cannot be
calculated with a high degree of precision from data available or simply cannot be readily calculated based on
generally accepted methodologies. In some cases, these estimates are particularly difficult to determine and we
must exercise significant judgment. In preparing our financial statements, the most difficult, subjective and complex
estimates and the assumptions that deal with the greatest amount of uncertainty relate to our accounting for landfills,
environmental remediation liabilities, asset impairments and self-insurance reserves and recoveries, as described
below. Actual results could differ materially from the estimates and assumptions that we use in the preparation of
our financial statements.
Landfills — The cost estimates for final capping, closure and post-closure activities at landfills for which we
have responsibility are estimated based on our interpretations of current requirements and proposed or anticipated
regulatory changes. We also estimate additional costs, pursuant to the requirements of SFAS No. 143, based on the
amount a third party would charge us to perform such activities even when we expect to perform these activities
internally. We estimate the airspace to be consumed related to each final capping event and the timing of
construction related to each final capping event and of closure and post-closure activities. Because landfill final
capping, closure and post-closure obligations are measured at estimated fair value using present value techniques,
changes in the estimated timing of construction of future landfill final capping and closure and post-closure
activities would have an effect on these liabilities, related assets and results of operations.
Landfill Costs — We estimate the total cost to develop each of our landfill sites to its remaining permitted and
expansion capacity. This estimate includes such costs as landfill liner material and installation, excavation for
airspace, landfill leachate collection systems, landfill gas collection systems, environmental monitoring equipment
for groundwater and landfill gas, directly related engineering, capitalized interest, on-site road construction and
other capital infrastructure costs. Additionally, landfill development includes all land purchases for landfill
footprint and required landfill buffer property. The projection of these landfill costs is dependent, in part, on
future events. The remaining amortizable basis of each landfill includes costs to develop a site to its remaining
permitted and expansion capacity and includes amounts previously expended and capitalized, net of accumulated
airspace amortization, and projections of future purchase and development costs.
Final Capping Costs — We estimate the cost for each final capping event based on the area to be finally
capped and the capping materials and activities required. The estimates also consider when these costs would
actually be paid and factor in inflation and discount rates. Our engineering personnel allocate final landfill capping
costs to specific capping events. The landfill capacity associated with each final capping event is then quantified and
the final capping costs for each event are amortized over the related capacity associated with the event as waste is
disposed of at the landfill. We review these costs annually, or more often if significant facts change. Changes in
estimates, such as timing or cost of construction, for final capping events immediately impact the required liability
and the corresponding asset. When the change in estimate relates to a fully consumed asset, the adjustment to the
asset must be amortized immediately through expense. When the change in estimate relates to a final capping event
that has not been fully consumed, the adjustment to the asset is recognized in income prospectively as a component
of landfill airspace amortization.
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