Two Types Accounting Procedures for Expenditures with Uncertainty

to Identify the Objectives of Types SFAS5 and SFAS143

Abstract

　This study aims to explain why two types of accounting procedures exist for expenditures with uncertainty in the current U.S.GAAP. For this purpose, we analyze the accounting standards for environmental remediation liabilities and for unvested employee termination benefits. We identify that the SFAS5 type is applied for matters considered in secondary decision making, while the SFAS143 type is applied for matters considered in primary decision making. This result shows that two accounting procedures exist for two different objectives.