ASC 320-965

Plan Accounting—Health and Welfare Benefit Plans

320 Investments—Debt Securities

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In brief

IntermediateSubsequent measurement Fair value Disclosure Industry-specific

ASC 320-965 tells health and welfare benefit plans how to account for their investments in debt and equity securities. Such securities are reported at fair value less costs to sell (if significant) at the financial statement date, and purchases and sales are ordinarily recorded on a trade-date basis. Settlement-date accounting is permitted only if the fair value did not change significantly between trade date and financial statement date and the transactions do not significantly affect the composition of plan assets available for benefits.

Key points (7)

Plan investments in equity or debt securities are reported at fair value less costs to sell, if significant, as of the financial statement date (320-965-35-1).
Accrual accounting requires purchases of securities to be recorded on a trade-date basis (320-965-25-1).
Settlement-date accounting for purchases is acceptable when settlement follows the financial statement date only if fair value less costs to sell did not change significantly from trade date to statement date and the purchases do not significantly affect the composition of plan assets available for benefits (320-965-25-1(a)-(b)).
The same trade-date rule and two-condition settlement-date exception apply to sales of securities (320-965-40-1).
Net appreciation or depreciation in the fair value less costs to sell, if significant, of investments is ordinarily disclosed in the notes to the financial statements (320-965-50-1).
Other investments of health and welfare benefit plans, particularly investment and insurance contracts, are addressed in Subtopic 965-325, not here (320-965-25-2).
Scope follows Section 965-10-15, the Overall health and welfare benefit plan Subtopic (320-965-15-1).

For students. Benefit plan accounting departs from ordinary ASC 320 classification: there is no held-to-maturity/available-for-sale/trading distinction — everything is at fair value less costs to sell, with changes flowing through the statement of changes in net assets available for benefits. The common trap is assuming settlement-date accounting is freely available; it is a narrow exception requiring both conditions in 320-965-25-1 to be met.

health and welfare benefit plan fair value less costs to sell trade-date accounting settlement-date accounting net appreciation or depreciation net assets available for benefits debt and equity securities employee benefit plan accounting

Machine-generated study aid for ASC 320-965. Check the source paragraphs below.

320-965-00Status

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320-965-00-1

The following table identifies the changes made to this Subtopic.

Paragraph	Action	Accounting Standards Update	Date

Fair Value (2nd def.)	Superseded	Accounting Standards Update No. 2012-04	10/01/2012
Fair Value (3rd def.)	Added	Accounting Standards Update No. 2012-04	10/01/2012

965-320-25-1	Amended	Accounting Standards Update No. 2012-04	10/01/2012
965-320-35-1	Amended	Accounting Standards Update No. 2012-04	10/01/2012
965-320-40-1	Amended	Accounting Standards Update No. 2012-04	10/01/2012
965-320-50-1	Amended	Accounting Standards Update No. 2012-04	10/01/2012

320-965-05Overview and Background

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320-965-05-1

This Subtopic provides guidance on debt and equity securities investments for health and welfare benefit plans.

320-965-15Scope and Scope Exceptions

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Overall Guidance

320-965-15-1

This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 965-10-15.

320-965-25Recognition

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320-965-25-1

The accrual basis of accounting requires that purchases of securities be recorded on a trade-date basis. However, if the settlement date is later than the financial statement date, accounting on a settlement-date basis for such purchases is acceptable if both of the following conditions exist:

a
The fair value less costs to sell, if significant, of the securities purchased just before the financial statement date does not change significantly from the trade date to the financial statement date.
b
The purchases do not significantly affect the composition of the plan's assets available for benefits.

320-965-25-2

See Subtopic 965-325 for guidance on accounting for other investments, in particular investment and insurance contracts, of health and welfare benefit plans.

320-965-35Subsequent Measurement

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320-965-35-1

Plan investments in the form of equity or debt securities shall be reported at their fair value less costs to sell, if significant, at the financial statement date.

320-965-40Derecognition

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320-965-40-1

The accrual basis of accounting requires that sales of securities be recorded on a trade-date basis. However, if the settlement date is later than the financial statement date, accounting on a settlement-date basis for such purchases is acceptable if both of the following conditions exist:

a
The fair value less costs to sell, if significant, of the securities sold just before the financial statement date does not change significantly from the trade date to the financial statement date.
b
The sales do not significantly affect the composition of the plan's assets available for benefits.

320-965-50Disclosure

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320-965-50-1

Ordinarily, information regarding the net appreciation or depreciation in the fair value less costs to sell, if significant, of investments shall be disclosed in the notes to financial statements.