Compensation—Nonretirement Postemployment Benefits

ASC 712-10 tells employers how to account for nonretirement postemployment benefits — special and contractual termination benefits plus other postemployment benefits such as severance, salary continuation, disability and continued health coverage paid to former or inactive employees after employment but before retirement. Recognition depends on the type of benefit: special termination benefits are accrued when employees accept the offer and the amount is reasonably estimable (712-10-25-1); contractual termination benefits when it is probable employees will be entitled to them and the amount is reasonably estimable, measured as lump sums plus the present value of expected future payments (712-10-25-2); and other postemployment benefits under the compensated-absences model of 710-10-25-1 if they accumulate or vest, otherwise under the loss contingency model of 450-20-25-2 (712-10-25-4 through 25-5). The subtopic excludes pension/OPEB plan benefits (715-30, 715-60), individual deferred compensation (710-10), one-time exit-or-disposal termination benefits (420-10), and stock compensation (Topic 718). The central idea is that the trigger and timing of accrual are driven by which benefit category applies, with discounting permitted but not required (712-10-35-1) and disclosure required when an obligation is unaccrued solely because it cannot be reasonably estimated (712-10-50-2).

Subtopics

1. 10Overall23 ¶

   ASC 712-10 governs employer accounting for nonretirement postemployment benefits — special and contractual termination benefits and other postemployment benefits (severance, salary continuation, disability, continued health coverage) paid to former or inactive employees after employment but before retirement and not paid through a pension or other postretirement plan. Special termination benefits are accrued when employees accept the offer and the amount is reasonably estimable; contractual termination benefits are accrued when it is probable employees will be entitled to them and the amount is reasonably estimable. Other postemployment benefits are accrued under Subtopic 710-10 if they accumulate or vest, and otherwise under the loss contingency model of paragraph 450-20-25-2.

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