REPUBLIC SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All tables in millions, except per share data) Ì (Continued)
Capitalized LandÑll Costs
Capitalized landÑll costs include expenditures for land, permitting costs, cell construction costs and
environmental structures. Capitalized permitting and cell construction costs are limited to direct costs relating
to these activities, including legal, engineering and construction costs associated with excavation, natural and
synthetic liners, construction of leachate collection systems, installation of methane gas collection and
monitoring systems, installation of groundwater monitoring wells, and other costs associated with the
development of the site. Interest is capitalized on landÑll construction projects while the assets are undergoing
activities to ready them for their intended use. Capitalized landÑll costs also include Ñnal capping, closure and
post-closure assets accrued in accordance with SFAS 143 as discussed below.
Costs related to acquiring land, excluding the estimated residual value of unpermitted, non-buÅer land,
and costs related to permitting and cell construction are depleted as airspace is consumed using the units-of-
consumption method.
Capitalized landÑll costs may also include an allocation of purchase price paid for landÑlls. For landÑlls
purchased as part of a group of several assets, the purchase price assigned to the landÑll is determined based
upon the discounted expected future cash Öows of the landÑll relative to the other assets within the acquired
group. If the landÑll meets the Company's expansion criteria, the purchase price is further allocated between
permitted airspace and expansion airspace based upon the ratio of permitted versus probable expansion
airspace to total available airspace. LandÑll purchase price is amortized using the units-of-consumption
method over the total available airspace including probable expansion airspace where appropriate.
Final Capping, Closure and Post-Closure Costs
On January 1, 2003, the Company changed the methodology it used to record Ñnal capping, closure and
post-closure expense in accordance with SFAS 143. SFAS 143 does not change the basic landÑll accounting
policies followed by the Company and others in the waste industry. Through December 31, 2002, the industry
has generally amortized capitalized costs and accrued future Ñnal capping, closure and post-closure obligations
using the units-of-consumption method as cubic yards of available airspace are consumed over the life of the
related landÑll. This practice is referred to as life cycle accounting and will continue to be followed except as
modiÑed by SFAS 143 as discussed below.
The table below reÖects signiÑcant changes between the Company's historical methodology and the
methodology the Company currently uses to account for Ñnal capping, closure and post-closure activities and
for methane gas collection systems:
Current Practice
Description Historical Practice (EÅective January 1, 2003)
DEFINITIONS:
Final Capping Costs related to installation of the No change.
components that comprise the
permanent Ñnal cover over areas of a
landÑll where airspace capacity has
been consumed.
Closure Includes routine maintenance costs No change, except that it includes
incurred after a site ceases to accept the Ñnal portion of the methane gas
waste, but prior to being certiÑed collection system to be constructed.
closed.
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