Proposed FASB staff position differs from IAS 37

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28 Jun 2003

The FASB staff has invited comment on a Draft FASB Staff Position (FSP) on accrual of a provision for a legislative requirement to remove asbestos that seems to reach a different conclusion from that in IAS 37 Example 6, "Legal Requirement to Fit Smoke Filters".

The draft FSP concludes that a legal requirement to remove asbestos creates a liability even if the owner of the building with asbestos could sell it subject to the obligation. IAS 37 Example 6 concludes that a legal requirement to fit a smoke filter does not create a liability -- the liability is created only when the filter is actually installed but not yet paid for.

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