What is Environmental Accounting

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Generally accepted accounting principles (GAAP) require companies to report environmental liabilities if occurrence is “probable” and their amounts are “reasonably estimable.” A liability is reasonably estimable if company management can develop a point estimate or determine that the amount falls within a particular dollar range. Even if the liability fails to meet one or both of these criteria, it must be disclosed in the footnotes of the financial statement if it is “reasonably possible.” “Reasonably possible” is defined as a range of possible outcomes that have a greater then remote chance of occurring.