The May 8 2008 edition of the Wall Street Journal

The May 8, 2008, edition of the Wall Street Journal contains an article by Heather Won
Tesoriero titled “Oil Firms Settle Claims in MTBE Leak Cases.”InstructionsRead the article and
answer the following questions.(a) In addition to paying $423 million in cash, the oil companies
agreed to pay cleanup costs that arise in the next 30 years. What accounting issues arise for
the oil companies from the promise to pay in the future?(b) Discuss the accounting criteria that
the oil companies must apply toward their promise to pay future costs.(c) What accounting
challenges do the companies face in trying to apply the accounting criteria to the promise to pay
in the future? What challenges are faced by investors who are analyzing the oil companies?(d)
Exxon Mobil Corp. chose to not settle. Instead it will go to court to dispute the charges. Discuss
the implications of this decision for Exxon Mobil’s accounting versus that of the companies that
chose to settle the case.View Solution:
The May 8 2008 edition of the Wall Street Journal
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