# ASC 715-30-35: Compensation—Retirement Benefits — Defined Benefit Plans—Pension — 35 Subsequent Measurement Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/715/30/#35-subsequent-measurement) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:a9e94e78a36ac4484219abc0ddaf44bae4e6f6eb0834e59fd2860b1161dfd42f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 715-30-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/715/30/#35-subsequent-measurement) SEC content: no #### Use of Reasonable Approximations ##### [715-30-35-1](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:f4fc682a40eb3658283d0b33d6b565099bc5d0749f903fb1e77b1e805ca804fa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic is intended to specify accounting objectives and results rather than specific computational means of obtaining those results. If estimates, averages, or computational shortcuts can reduce the cost of applying this Subtopic, their use is appropriate, provided the results are reasonably expected not to be materially different from the results of a detailed application. #### Benefit Obligations ##### [715-30-35-1A](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-1A) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:70964fbd54eae0c63c58491dba4986e6addea4ee67d992ced9516301d10a2eb1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The [projected benefit obligation](https://asc.understandingaccounting.org/glossary/p/#projected-benefit-obligation "The actuarial present value as of a date of all benefits attributed by the pension benefit formula to employee service rendered before that date. The projected benefit obligation is measured using assumptions as to future compensation levels if the pension benefit formula is based on those future compensation levels (pay-related, final-pay, final-average-pay, or career-average-pay plans).") as of a date is the [actuarial present value](https://asc.understandingaccounting.org/glossary/a/#actuarial-present-value "The value, as of a specified date, of an amount or series of amounts payable or receivable thereafter, with each amount adjusted to reflect the time value of money (through discounts for interest) and the probability of payment (by means of decrements for events such as death, disability, withdrawal, or retirement) between the specified date and the expected date of payment.") of all [benefits](https://asc.understandingaccounting.org/glossary/b/#benefits "The monetary or in-kind benefits or benefit coverage to which participants may be entitled under a pension plan or a health and welfare plan (which can include active, terminated, and retired employees or their dependents or beneficiaries). Examples of benefits may include, but are not limited to, health care benefits, life insurance, legal, educational, and advisory services, pension benefits, disability benefits, death benefits, and benefits due to termination of employment.") attributed by the [plan's benefit formula](https://asc.understandingaccounting.org/glossary/p/#plan-s-benefit-formula "See Pension Benefit Formula.") to employee [service](https://asc.understandingaccounting.org/glossary/s/#service "Employment taken into consideration under a pension plan. Years of employment before the inception of a plan constitute an employee's past service; years thereafter are classified in relation to the particular actuarial valuation being made or discussed. Years of employment (including past service) before the date of a particular valuation constitute prior service; years of employment following the date of the valuation constitute future service; a year of employment adjacent to the date of valuation, or in which such date falls, constitutes current service.") rendered before that date. The projected benefit obligation is measured using an [assumption](https://asc.understandingaccounting.org/glossary/a/#assumptions "Estimates of the occurrence of future events affecting pension costs and other postretirement benefit costs (as applicable), such as turnover, retirement age, mortality, withdrawal, disablement, dependency status, per capita claims costs by age, health care cost trend rates, levels of Medicare and other health care providers' reimbursements, changes in compensation and national pension benefits, and discount rates to reflect the time value of money.") as to future compensation levels if the pension [benefit formula](https://asc.understandingaccounting.org/glossary/b/#benefit-formula "See Pension Benefit Formula.") is based on those future compensation levels. Plans for which the pension benefit formula is based on future compensation are sometimes called pay-related, [final-pay](https://asc.understandingaccounting.org/glossary/f/#final-pay-formula "A benefit formula that bases benefits on the employee's compensation over a specified number of years near the end of the employee's service period or on the employee's highest compensation periods. For example, a plan might provide annual pension benefits equal to 1 percent of the employee's average salary for the last 5 years (or the highest consecutive 5 years) for each year of service. A final-pay plan is a plan with such a formula."), final-average-pay, or [career-average-pay](https://asc.understandingaccounting.org/glossary/c/#career-average-pay-formula "A benefit formula that bases benefits on the employee's compensation over the entire period of service with the employer. A career-average-pay plan is a plan with such a formula.") plans. Plans for which the pension benefit formula is not based on future compensation levels are called non-pay-related or [flat-benefit plans](https://asc.understandingaccounting.org/glossary/f/#flat-benefit-formula "A benefit formula that bases benefits on a fixed amount per year of service, such as $20 of monthly retirement income for each year of credited service. A flat-benefit plan is a plan with such a formula."). The projected benefit obligation is a measure of benefits attributed to service to date assuming that the plan continues in effect and that estimated future events (including compensation increases, [turnover](https://asc.understandingaccounting.org/glossary/t/#turnover "Termination of employment for a reason other than death or retirement."), and [mortality](https://asc.understandingaccounting.org/glossary/m/#mortality "The relative incidence of death in a given time or place.")) occur. ##### [715-30-35-2](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:11dbc89a543adcb8adf22beb36082432a9fa319a3344c51a5bc12c1d0f173e82 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The [accumulated benefit obligation](https://asc.understandingaccounting.org/glossary/a/#accumulated-benefit-obligation "The actuarial present value of benefits (whether vested or nonvested) attributed, generally by the pension benefit formula, to employee service rendered before a specified date and based on employee service and compensation (if applicable) before that date. The accumulated benefit obligation differs from the projected benefit obligation in that it includes no assumption about future compensation levels. For plans with flat-benefit or non-pay-related pension benefit formulas, the accumulated benefit obligation and the projected benefit obligation are the same.") as of a date is the actuarial present value of benefits attributed by the pension benefit formula to employee service rendered before that date and based on current and past compensation levels. The accumulated benefit obligation differs from the projected benefit obligation in that it includes no assumption about future compensation levels. For plans with flat-benefit or non-pay-related pension benefit formulas, the accumulated benefit obligation and the projected benefit obligation are the same. The accumulated benefit obligation and the [vested benefit obligation](https://asc.understandingaccounting.org/glossary/v/#vested-benefit-obligation "The actuarial present value of vested benefits.") provide information about the obligation the employer would have if the plan were discontinued. #### Components of Net Periodic Pension Cost ##### [715-30-35-3](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:a22b527890b85e95310a1d05c719e2635f5fa614866adb5dd704f9b2409117af Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Net periodic pension cost](https://asc.understandingaccounting.org/glossary/n/#net-periodic-pension-cost "The amount recognized in an employer's financial statements as the cost of a pension plan for a period. Components of net periodic pension cost are service cost, interest cost, actual return on plan assets, gain or loss, amortization of prior service cost or credit, and amortization of the transition asset or obligation existing at the date of initial application of Subtopic 715-30. The term net periodic pension cost is used instead of net pension expense because the service cost component recognized in a period may be capitalized as part of an asset such as inventory.") has often been viewed as a single homogeneous amount, but in fact it is made up of several components that reflect different aspects of the employer's financial arrangements as well as the cost of benefits earned by employees. The cost of a benefit can be determined without regard to how the employer decides to finance the plan. ##### [715-30-35-4](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:7fdf3e910c8faeded4ab5bc9ef4864044ac872bba1e0e7ff0cb7ddc81f1199a8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. All of the following components shall be included in the net pension cost recognized for a period by an employer sponsoring a [defined benefit pension plan](https://asc.understandingaccounting.org/glossary/d/#defined-benefit-plan "A defined benefit plan provides participants with a determinable benefit based on a formula provided for in the plan. Defined benefit health and welfare plans—Defined benefit health and welfare plans specify a determinable benefit, which may be in the form of a reimbursement to the covered plan participant or a direct payment to providers or third-party insurers for the cost of specified services. Such plans may also include benefits that are payable as a lump sum, such as death benefits. The level of benefits may be defined or limited based on factors such as age, years of service, and salary. Contributions may be determined by the plan's actuary or be based on premiums, actual claims paid, hours worked, or other factors determined by the plan sponsor. Even when a plan is funded pursuant to agreements that specify a fixed rate of employer contributions (for example, a collectively bargained multiemployer plan), such a plan may nevertheless be a defined benefit health and welfare plan if its substance is to provide a defined benefit. Defined benefit pension plan—A pension plan that defines an amount of pension benefit to be provided, usually as a function of one or more factors such as age, years of service, or compensation. Any pension plan that is not a defined contribution pension plan is, for purposes of Subtopic 715-30, a defined benefit pension plan. Defined benefit postretirement plan—A plan that defines postretirement benefits in terms of monetary amounts (for example, $100,000 of life insurance) or benefit coverage to be provided (for example, up to $200 per day for hospitalization, or 80 percent of the cost of specified surgical procedures). Any postretirement benefit plan that is not a defined contribution postretirement plan is, for purposes of Subtopic 715-60, a defined benefit postretirement plan. (Specified monetary amounts and benefit coverage are collectively referred to as benefits.)"): 1. a [Service cost](https://asc.understandingaccounting.org/glossary/s/#service-cost-component-of-net-periodic-pension-cost "A component of net periodic pension cost recognized in a period determined as the actuarial present value of benefits attributed by the pension benefit formula to services rendered by employees during that period. The service cost component is a portion of the projected benefit obligation and is unaffected by the funded status of the plan.") 2. b [Interest cost](https://asc.understandingaccounting.org/glossary/i/#interest-cost-component-of-net-periodic-pension-cost "The amount recognized in a period determined as the increase in the projected benefit obligation due to the passage of time.") 3. c [Actual return on plan assets](https://asc.understandingaccounting.org/glossary/a/#actual-return-on-plan-assets-component-of-net-periodic-pension-cost "For a funded plan, the actual return on plan assets is determined as the difference between the fair value of plan assets at the end of the period and the fair value at the beginning of the period, adjusted for contributions and payments of benefits during the period."), if any 4. d [Amortization](https://asc.understandingaccounting.org/glossary/a/#amortization "The process of reducing a recognized liability systematically by recognizing gains or by reducing a recognized asset systematically by recognizing losses. In accounting for pension benefits or other postretirement benefits, amortization also means the systematic recognition in net periodic pension cost or other postretirement benefit cost over several periods of amounts previously recognized in other comprehensive income, that is, gains or losses, prior service cost or credits, and any transition obligation or asset.") of any [prior service cost](https://asc.understandingaccounting.org/glossary/p/#prior-service-cost "The cost of retroactive benefits granted in a plan amendment. Retroactive benefits are benefits granted in a plan amendment (or initiation) that are attributed by the benefit formula to employee services rendered in periods before the amendment.") or credit included in accumulated other comprehensive income 5. e [Gain or loss](https://asc.understandingaccounting.org/glossary/g/#gain-or-loss-component-of-net-periodic-pension-cost "The sum of the difference between the actual return on plan assets and the expected return on plan assets and the amortization of the net gain or loss recognized in accumulated other comprehensive income. The gain or loss component is the net effect of delayed recognition of gains and losses in determining net periodic pension cost (the net change in the gain or loss) in accumulated other comprehensive income except that it does not include changes in the projected benefit obligation occurring during the period and deferred for later recognition in net periodic pension cost.") (including the effects of changes in assumptions), which includes, to the extent recognized (see paragraph [715-30-35-26](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-26)), amortization of the net gain or loss included in accumulated other comprehensive income 6. f Amortization of any net transition asset or obligation existing at the date of initial application of this Subtopic and remaining in accumulated other comprehensive income. ##### [715-30-35-5](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:624809ff430ed42fae6e7a74e35df1754bddf46b39848311b4b7873cd5acee6f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Note that both the [return on plan assets](https://asc.understandingaccounting.org/glossary/a/#actual-return-on-plan-assets-component-of-net-periodic-pension-cost "For a funded plan, the actual return on plan assets is determined as the difference between the fair value of plan assets at the end of the period and the fair value at the beginning of the period, adjusted for contributions and payments of benefits during the period.") and interest cost components are in substance financial items rather than employee compensation costs. An employer may have net periodic pension cost that is a net credit (that is, net periodic pension income) as noted in paragraph [715-30-55-3](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-3). ##### [715-30-35-6](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:d4d6bd444db6b18ce4226cb07d38672d618df0fdfc3b3234dd0c0a2819701365 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The service cost component of net periodic pension cost is the actuarial present value of benefits attributed by the plan's benefit formula to services rendered by employees during the period. The service cost component is conceptually the same for an unfunded plan, a plan with minimal funding, and a well-funded plan. ##### [715-30-35-7](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:cecad1e71d2f821b797142a688e32b0bfd78c546a8fb35e66cb4ec9d26f39e2a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The measurement of the service cost component requires use of an [attribution](https://asc.understandingaccounting.org/glossary/a/#attribution "The process of assigning pension or other postretirement benefits or costs to periods of employee service.") method and assumptions. That measurement is discussed in paragraphs [715-30-35-29 through 35-46](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-29) . ##### [715-30-35-7A](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-7A) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:bcae22a75c40be21a16245b0f521eef2531cd610155938473be04758809e5184 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The service cost component shall be the only component of net periodic pension cost eligible to be capitalized as part of the cost of inventory or other assets. ##### [715-30-35-8](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:c2353a3da95245044dd07cf80604b878208f79f687a8c5285763c2e5058abbf5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The interest cost component of net periodic pension cost is interest on the projected benefit obligation, which is a discounted amount. Measuring the projected benefit obligation as a present value requires accrual of an interest cost at rates equal to the assumed [discount rates](https://asc.understandingaccounting.org/glossary/d/#discount-rate "A rate or rates used to reflect the time value of money. Discount rates are used in determining the present value as of the measurement date of future cash flows currently expected to be required to satisfy the pension obligation or other postretirement benefit obligation. See Actuarial Present Value."). ##### [715-30-35-9](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:28a089b5214e7cd81ac29207712820014dd0213cfda60928c62e9d33c5d2a726 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The interest cost component of net periodic pension cost shall not be considered interest for purposes of applying Subtopic 835-20. ##### [715-30-35-10](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:5b2eb6adc471a15c65d51754c4d5edcb75153076a59196b5da15b448a9949e9f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Plan amendments](https://asc.understandingaccounting.org/glossary/p/#plan-amendment "A change in the existing terms of a plan or the initiation of a new plan. A plan amendment may increase benefits (a positive plan amendment), or reduce or eliminate benefits (a negative plan amendment), including those benefits attributed to years of service already rendered.") (including initiation of a plan) often include provisions that grant increased benefits based on services rendered in prior periods. Because plan amendments are granted with the expectation that the employer will realize economic benefits in future periods, this Subtopic does not require the cost of providing such retroactive benefits (that is, prior service cost) to be included in net periodic pension cost entirely in the year of the amendment, absent the conditions addressed in paragraph [715-30-35-16](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-16), but provides for recognition during the future service periods of those employees active at the date of the amendment who are expected to receive benefits under the plan. ##### [715-30-35-11](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:de7470905399ced77e35d8a1a3a5ea6d5b093533fe78afa5356f980266daee0d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A plan amendment that retroactively increases benefits (including benefits that are granted to retirees) increases the projected benefit obligation. The cost of the benefit improvement shall be recognized as a charge to other comprehensive income at the date of the amendment. Except as specified in paragraphs [715-30-35-13 through 35-16](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-13) , that prior service cost shall be amortized as a component of net periodic pension cost by assigning an equal amount to each future period of service of each employee active at the date of the amendment who is expected to receive benefits under the plan. If all or almost all of a plan's participants are inactive, the cost of retroactive plan amendments affecting benefits of inactive participants shall be amortized based on the remaining life expectancy of those participants instead of based on the remaining service period. Other comprehensive income is adjusted each period as prior service cost is amortized. ##### [715-30-35-12](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:7dd3747870a5ddc9c662182b409c94f84ba83b9e2c003a51f01ca2a4716b07a4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Example 1 (paragraph [715-30-55-93](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-93)) for an illustration of this guidance to amortize prior service cost. ##### [715-30-35-13](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:147b7cfa3de43478b8c65bfcebd46ec1e110b3da2b9e6c9477190a95e28444df Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To reduce the complexity and detail of the computations required, consistent use of an alternative approach that more rapidly amortizes the cost of retroactive amendments is acceptable. For example, a straight-line amortization of the cost over the average remaining service period of employees expected to receive benefits under the plan is acceptable. ##### [715-30-35-14](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-14) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:e346f11607cf1297ae851c7dec57532b744e735f2533fe13740043b57b5388a6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In some situations a history of regular plan amendments and other evidence may indicate that the period during which the employer expects to realize economic benefits from an amendment granting retroactive benefits is shorter than the entire remaining service period of the active employees. Identification of such situations requires an assessment of the individual circumstances and the substance of the particular plan situation. In those circumstances, the amortization of prior service cost shall be accelerated to reflect the more rapid expiration of the employer's economic benefits and to recognize the cost in the periods benefited. ##### [715-30-35-15](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-15) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:002c760cbc6dc31f21684aea3566851d5fa9ae3d3ce0e2f5bc0c146bc33069e4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Once a schedule of amortization of prior service cost from a specific retroactive plan amendment has been established, that schedule generally should not be revised. The initial schedule shall be revised only if a [curtailment](https://asc.understandingaccounting.org/glossary/c/#curtailment "See Plan Curtailment.") occurs (see paragraph [715-30-35-92](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-92)) or if events indicate that the period during which the employer expects to realize future economic benefits from the retroactive plan amendment giving rise to the prior service cost is shorter than originally estimated or the future economic benefits have been impaired. The schedule shall not be revised because of ordinary variances in expected service lives of employees, nor shall the schedule be revised so that the prior service cost is recognized in net periodic pension cost more slowly. ##### [715-30-35-16](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-16) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:121ed128e3e989cda163b06dab90d63a20c348147aa5ce82f709c2fc3711005e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Prior service cost is recognized immediately in other comprehensive income, unless, based on an assessment of the facts and circumstances, the employer does not expect to realize any future economic benefits from that retroactive plan amendment (see paragraph [715-30-35-14](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-14)). However, this Subtopic does not permit an accounting policy to recognize immediately as a component of net periodic pension cost the cost of all plan amendments that grant increased benefits for services rendered in prior periods. Adopting an accounting policy to recognize prior service cost immediately in net periodic pension cost would preclude making that assessment for future plan amendments as they occur. ##### [715-30-35-17](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-17) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:234dc6b2165567acaf0ebf634d8d9063ea236927d43640f6b7a2d6fbf913be19 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A plan amendment that retroactively reduces, rather than increases, benefits decreases the projected benefit obligation. The reduction in benefits shall be recognized as a credit (prior service credit) to other comprehensive income that shall be used first to reduce any remaining prior service cost included in accumulated other comprehensive income. Any remaining prior service credit shall be amortized as a component of net periodic pension cost on the same basis as the cost of a benefit increase. ##### [715-30-35-18](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-18) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:c51e157994b26b41d4d43abbb910326c05e213774f8e9d80bc867cdbb8914b0d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As established in the definition of the term, a gain or loss results from a change in the value of either the projected benefit obligation or the [plan assets](https://asc.understandingaccounting.org/glossary/p/#plan-assets "Assets—usually stocks, bonds, and other investments—that have been segregated and restricted, usually in a trust, to provide for pension benefits. The amount of plan assets includes amounts contributed by the employer, and by employees for a contributory plan, and amounts earned from investing the contributions, less benefits paid. Plan assets ordinarily cannot be withdrawn by the employer except under certain circumstances when a plan has assets in excess of obligations and the employer has taken certain steps to satisfy existing obligations. Assets not segregated in a trust or otherwise effectively restricted so that they cannot be used by the employer for other purposes are not plan assets even though it may be intended that such assets be used to provide pensions. If a plan has liabilities other than for benefits, those nonbenefit obligations may be considered as reductions of plan assets. Amounts accrued by the employer but not yet paid to the plan are not plan assets. Securities of the employer held by the plan are includable in plan assets provided they are transferable.") resulting from experience different from that assumed or from a change in an actuarial assumption. This Subtopic generally does not distinguish between gains and losses that result from experience different from that assumed or from changes in assumptions. Gains and losses include amounts that have been realized, for example by sale of a security, as well as amounts that are unrealized. ##### [715-30-35-19](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-19) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:4cdc934967cd7a0ffaea5f903910fb0c587cc772b990d601caa563453cfdbcb5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Because gains and losses may reflect refinements in estimates as well as real changes in economic values and because some gains in one period may be offset by losses in another or vice versa, this Subtopic does not require recognition of gains and losses as components of net pension cost of the period in which they arise. ##### [715-30-35-20](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-20) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:6c7537f071cd12f03383667dc1e96a3febd2fc430b4c82253470e6db9ffa19b0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. However, immediate recognition of gains and losses as a component of net periodic pension cost is permitted if that method is applied consistently, and is applied to all gains and losses on both plan assets and obligations. ##### [715-30-35-21](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-21) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:dcb38f0e2254326d62bdedca5d03a31e551c935817fc24e075683c0e8cb36a51 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Gains and losses that are not recognized immediately as a component of net periodic pension cost shall be recognized as increases or decreases in other comprehensive income as they arise. Accounting for [plan terminations](https://asc.understandingaccounting.org/glossary/p/#plan-termination "An event in which the pension plan or postretirement benefit plan ceases to exist and all benefits are settled by the purchase of insurance contracts (for example, annuities) or by other means. The plan may or may not be replaced by another plan. A plan termination with a replacement plan may or may not be in substance a plan termination for accounting purposes.") and [curtailments](https://asc.understandingaccounting.org/glossary/c/#plan-curtailment "An event that significantly reduces the expected years of future service of present employees or eliminates for a significant number of employees the accrual of defined benefits for some or all of their future services.") and other circumstances in which recognition of gains and losses as a component of net periodic pension cost might not be delayed is addressed in the Settlements, Curtailments, and Certain Termination Benefits Subsection of this Section. ##### [715-30-35-22](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-22) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:5318e77fe1a4c5f67d2682c7e5169f68bca08413e97d5bf2bc04ae6156962069 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Asset gains and losses are differences between the actual return on plan assets during a period and the [expected return on plan assets](https://asc.understandingaccounting.org/glossary/e/#expected-return-on-plan-assets "An amount calculated as a basis for determining the extent of delayed recognition of the effects of changes in the fair value of plan assets. The expected return on plan assets is determined based on the expected long-term rate of return on plan assets and the market-related value of plan assets.") for that period. Asset gains and losses include both changes reflected in the [market-related value of plan assets](https://asc.understandingaccounting.org/glossary/m/#market-related-value-of-plan-assets "A balance used to calculate the expected return on plan assets. The market-related value of plan assets is either fair value or a calculated value that recognizes changes in fair value in a systematic and rational manner over not more than five years. Different ways of calculating market-related value may be used for different classes of assets (for example, an employer might use fair value for bonds and a five-year-moving-average value for equities), but the manner of determining market-related value is required to be applied consistently from year to year for each asset class. For a method to meet the criteria of being systematic and rational, it must reflect only the changes in the fair value of plan assets between various dates.") and changes not yet reflected in the market-related value (that is, the difference between the fair value of assets and the market-related value). Gains or losses on transferable securities issued by the employer and included in plan assets are also included in asset gains and losses. Asset gains and losses not yet reflected in market-related value are not required to be amortized under paragraphs [715-30-35-24 through 35-25](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-24) . ##### [715-30-35-23](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-23) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:63992c81ae155181f6ee0eeddbbf9a5fb70f38d8f5dbda758d3eaecf20885ba4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In other words, the expected return on plan assets generally will be different from the actual return on plan assets for the year. This Subtopic provides for recognition of that difference (a net gain or loss) in other comprehensive income in the period it arises. The amount recognized in other comprehensive income is also a component of net periodic pension cost for the current period. Thus, the amount recognized in other comprehensive income and the actual return on plan assets, when aggregated, equal the expected return on plan assets. The amount recognized in accumulated other comprehensive income affects future net periodic pension cost through subsequent amortization, if any, of the net gain or loss. ##### [715-30-35-24](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-24) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:3c733eef88d9f32d0ad2ee8ff0db69e7f1df8fe05fc89986c90a220d0a6e2694 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As a minimum, amortization of a net gain or loss included in accumulated other comprehensive income (excluding asset gains and losses not yet reflected in market-related value) shall be included as a component of net pension cost for a year if, as of the beginning of the year, that net gain or loss exceeds 10 percent of the greater of the projected benefit obligation or the market-related value of plan assets. If amortization is required, the minimum amortization shall be that excess divided by the average remaining service period of active employees expected to receive benefits under the plan. The amortization must always reduce the beginning-of-the-year balance. Amortization of a net gain results in a decrease in net periodic pension cost; amortization of a net [loss](https://asc.understandingaccounting.org/glossary/l/#loss "See Gain or Loss.") results in an increase in net periodic pension cost. If all or almost all of a plan's participants are inactive, the average remaining life expectancy of the inactive participants shall be used instead of average remaining service. ##### [715-30-35-25](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-25) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:fc105f444892cbd736d6c45ac6bed8653b3e23165367a8fd33bff85a55dd224d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Any systematic method of amortizing gains or losses may be used in lieu of the minimum specified in the preceding paragraph provided that all of the following conditions are met: 1. a The minimum is used in any period in which the minimum amortization is greater (reduces the net balance included in accumulated other comprehensive income by more). 2. b The method is applied consistently. 3. c The method is applied similarly to both gains and losses. ##### [715-30-35-26](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-26) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:608a5e08a7956aced86cd00240dc87e86bf1968a6a40d261d14b1367e6ce25b7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The [gain or loss component of net periodic pension cost](https://asc.understandingaccounting.org/glossary/g/#gain-or-loss-component-of-net-periodic-pension-cost "The sum of the difference between the actual return on plan assets and the expected return on plan assets and the amortization of the net gain or loss recognized in accumulated other comprehensive income. The gain or loss component is the net effect of delayed recognition of gains and losses in determining net periodic pension cost (the net change in the gain or loss) in accumulated other comprehensive income except that it does not include changes in the projected benefit obligation occurring during the period and deferred for later recognition in net periodic pension cost.") shall consist of both of the following: 1. a The difference between the actual return on plan assets and the expected return on plan assets 2. b Amortization of the net gain or loss included in accumulated other comprehensive income. ##### [715-30-35-27](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-27) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:e0354b618eb452a53f214d1880896e960ec9ddf34e666a42b7ad641f408ec4ca Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Consequently, as stated in the definition of the term, the gain or loss component is the net effect of delayed recognition of gains and losses in determining net periodic pension cost (the net change in the gain or loss) in accumulated other comprehensive income except that it does not include changes in the projected benefit obligation occurring during the period and deferred for later recognition in net periodic pension cost. ##### [715-30-35-28](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-28) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:a08eb4d14615870c350b6b6c93f81ceda734776698df1d03b1d7a7ea4cabf2e6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Example 2 (paragraph [715-30-55-101](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-101)) for an illustration of this guidance on gains and losses. #### Measurement of Costs and Obligations ##### [715-30-35-29](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-29) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:14a9d68b67e6ea39302b71f529d093ccdcf5b86a345038a87a5c1778bb97c98b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Any method of pension accounting that recognizes cost before the payment of benefits to retirees must deal with two problems stemming from the nature of the defined benefit pension contract. First, estimates or assumptions must be made concerning the future events that will determine the amount and timing of the benefit payments. Second, some approach to attributing the cost of [pension benefits](https://asc.understandingaccounting.org/glossary/p/#pension-benefits "Periodic (usually monthly) payments made pursuant to the terms of the pension plan to a person who has retired from employment or to that person's beneficiary.") to individual years of service must be selected. Thus, the assumptions and the attribution of cost to periods of employee service are fundamental to the measurements of net periodic pension cost and pension obligations required by this Subtopic. For example, the service component of net periodic pension cost, the projected benefit obligation, and the accumulated benefit obligation are based on an attribution of pension benefits to periods of employee service and on the use of actuarial assumptions to calculate the actuarial present value of those benefits. ##### [715-30-35-30](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-30) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:46ac1d055f2cdc091fa46ba98218b57b4ac9fa1b171392a30ca40edb47800c5e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [715-30-35-42](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-42) requires use of explicit assumptions, each of which individually represents the best estimate of a particular future event. This Subtopic also requires use of the terms of the pension plan itself, specifically the plan's benefit formula, as a basis for attributing benefits earned and their cost to periods of employee service. ##### [715-30-35-31](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-31) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:f6d9677687daeedaf0aa3f7593da7628bb712da1234cb11c85afa40d9c8bfb9f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The service cost component of net periodic pension cost and the projected benefit obligation shall reflect future compensation levels to the extent that the pension benefit formula defines pension benefits wholly or partially as a function of future compensation levels (that is, for a final-pay plan or a career-average-pay plan). Future increases for which a present commitment exists as described in paragraph [715-30-35-34](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-34) shall be similarly considered. Assumed compensation levels shall reflect an estimate of the actual future compensation levels of the individual employees involved, including future changes attributed to general price levels, productivity, seniority, promotion, and other factors. All assumptions shall be consistent to the extent that each reflects expectations of the same future economic conditions, such as future rates of inflation. Measuring service cost and the projected benefit obligation based on estimated future compensation levels entails considering indirect effects, such as changes under existing law in social security benefits or benefit limitations that would affect benefits provided by the plan, for example, those currently imposed by Section 415 of the Internal Revenue Code. However, possible amendments of the law shall not be considered in determining those pension measurements. Assumed compensation levels shall be consistent with assumed discount rates to the extent that both incorporate expectations of the same future economic conditions. Paragraphs [715-30-55-20 through 55-22](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-20) discuss and provide examples of applying this guidance. ##### [715-30-35-32](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-32) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:24d900881d8af0eeab0edd03dc398dfce5d1bde2f1e66e95b9158ffc45001d90 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The accumulated benefit obligation shall be measured based on employees' history of service and compensation without an estimate of future compensation levels. Excluding estimated future compensation levels also means excluding indirect effects of future changes such as increases in the social security wage base. In measuring the accumulated benefit obligation, projected years of service shall be a factor only in determining employees' expected eligibility for particular benefits, such as any of the following: 1. a Increased benefits that are granted provided a specified number of years of service are rendered (for example, a pension benefit that is increased from $9 per month to $10 per month for each year of service if 20 or more years of service are rendered) 2. b Early retirement benefits 3. c Death benefits 4. d Disability benefits. ##### [715-30-35-33](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-33) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:ea3941b1267e41d88847aa9809afbd47178819e9ce8bd7f9eb1f13943f763594 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [715-30-35-34](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-34) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:c2f97d5fd65f027e872ac4d90d4f4d6ad17c0313fc932e43a6dfd4850f75173d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In some situations a history of regular increases in non-pay-related benefits or benefits under a career-average-pay plan and other evidence may indicate that an employer has a present commitment to make future amendments and that the substance of the plan is to provide benefits attributable to prior service that are greater than the benefits defined by the written terms of the plan. In those situations, the substantive commitment shall be the basis for the accounting. ##### [715-30-35-35](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-35) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:0f01dfd88e8453dcca51ad4fa1eb4ddf3e5e73b2b0eb306f982b14e94f431b15 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Automatic benefit increases specified by the plan (for example, automatic cost-of-living increases) that are expected to occur shall be included in measurements of the projected, accumulated, and vested benefit obligations, and the service cost component required by this Subtopic. Also, retroactive plan amendments shall be included in the computation of the projected and accumulated benefit obligations once they have been contractually agreed to, even if some provisions take effect only in future periods. For example, if a plan amendment grants a higher benefit level for employees retiring after a future date, the higher benefit level shall be included in current-period measurements for employees expected to retire after that date. ##### [715-30-35-36](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-36) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:c17e2f65d99f4f34c2ab18592caf17cf88caad7fb5284f15ea6caf7c524e5405 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For purposes of this Subtopic, pension benefits ordinarily shall be attributed to periods of employee service based on the plan's benefit formula to the extent that the formula states or implies an attribution. For example, if a plan's formula provides for a pension benefit of $10 per month for life for each year of service, the benefit attributed to each year of an employee's service is $10 times the number of months of life expectancy after retirement, and the cost attributable to each year is the actuarial present value of that benefit. For plan benefit formulas that define benefits similarly for all years of service, that attribution is a [benefit-years-of-service approach](https://asc.understandingaccounting.org/glossary/b/#benefit-years-of-service-approach "One of three benefit approaches. Under this approach, an equal portion of the total estimated benefit is attributed to each year of service. The actuarial present value of the benefits is derived after the benefits are attributed to the periods.") because it attributes the same amount of the pension benefit to each year of service. For final-pay and career-average-pay plans, that attribution is also the same as the projected unit credit or unit credit with service prorate actuarial cost method. For a flat-benefit plan, it is the same as the unit credit actuarial cost method. ##### [715-30-35-37](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-37) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:f0020bf583046ca7b0f4105498f6b6e8b57adf835f0e3bd7b34e661209cafa9d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Some plans define different benefits for different years of service. For example, a step-rate plan might provide a benefit of 1 percent of final pay for each year of service up to 20 years and 1½ percent of final pay for years of service in excess of 20. Another plan might provide 1 percent of final pay for each year of service but limit the total benefit to no more than 20 percent of final pay. For such plans the attribution called for by this Subtopic will not assign the same amount of pension benefit to each year of service. ##### [715-30-35-38](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-38) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:95b3272030933d5706f1023c1d06b3686be5525aaa3c0d795ee2a1443613933a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Some plans may have benefit formulas that attribute all or a disproportionate share of the total benefits provided to later years of service, thereby achieving in substance a delayed vesting of benefits. For example, a plan that provides no benefits for the first 19 years of service and a vested benefit of $10,000 for the 20th year is substantively the same as a plan that provides $500 per year for each of 20 years and requires 20 years of service before benefits vest. For such plans the total projected benefit shall be considered to accumulate in proportion to the ratio of the number of completed years of service to the number that will have been completed when the benefit is first fully vested. If a plan's benefit formula does not specify how a particular benefit relates to services rendered, the benefit shall be considered to accumulate in either of the following manners: 1. a For benefits of a type includable in [vested benefits](https://asc.understandingaccounting.org/glossary/v/#vested-benefits "Benefits for which the employee's right to receive a present or future pension benefit is no longer contingent on remaining in the service of the employer. (Other conditions, such as inadequacy of the pension fund, may prevent the employee from receiving the vested benefit.) Under graded vesting, the initial vested right may be to receive in the future a stated percentage of a pension based on the number of years of accumulated credited service; thereafter, the percentage may increase with the number of years of service or of age until the right to receive the entire benefit has vested.")(for example, a supplemental early retirement benefit that is a vested benefit after a stated number of years), in proportion to the ratio of the number of completed years of service to the number that will have been completed when the benefit is first fully vested 2. b For benefits of a type not includable in vested benefits (for example, a death or disability benefit that is payable only if death or disability occurs during active service), in proportion to the ratio of completed years of service to total projected years of service. ##### [715-30-35-39](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-39) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:a07d5327ce3fcbda242747d555bf777cf0bda9d28c56d300aa5eba9836d708d8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Under the attribution approach described in paragraphs [715-30-35-36 through 35-38](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-36) , the projected benefit obligation will always equal or exceed the accumulated benefit obligation. ##### [715-30-35-40](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-40) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:aa07a3a6c16224d13f00c528109dabb89b45f3af16648fe1e8a2b669eb8d7097 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Under some defined benefit pension plans (typically foreign plans), the actuarial present value of benefits to which an employee is entitled if the employee terminates immediately may exceed the actuarial present value of benefits to which the employee is entitled at the expected date of separation based on service to date. For example, at one point in time, the provisions of one country's severance pay statute required that, in most cases, the benefit an employee had accrued for service to date was payable immediately upon separation. The undiscounted value of that benefit payable currently would exceed the actuarial present value of that benefit if payment was estimated to occur at the employee's expected termination date. Another example arises in another country where legislation required that deferred vested benefits of terminated employees be statutorily revalued from date of separation to normal retirement age. If the vested benefit obligation was determined assuming employee termination at the measurement date, that vested benefit obligation could exceed the accumulated benefit obligation if that obligation was measured giving consideration to a statutory revaluation only after the employee's expected date of termination. ##### [715-30-35-41](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-41) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:80fef6567ecdf77c4b51d3afb907234529341ec2048731ab6768ab9c40c238aa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The vested benefit obligation in the situations addressed in the preceding paragraph may be determined as either the actuarial present value of the vested benefits to which the employee is entitled if the employee separates immediately or the actuarial present value of the vested benefits to which the employee is currently entitled but based on the employee's expected date of separation or retirement. Either approach is acceptable for situations not otherwise addressed by this Subtopic in which the facts and circumstances are analogous to those in the preceding paragraph. #### Assumptions ##### [715-30-35-42](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-42) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:d49f3f75bef8c75f34eaae966c231b85f0b669be749e7efaeb283f0fe4f00684 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic requires an [explicit approach to assumptions](https://asc.understandingaccounting.org/glossary/e/#explicit-approach-to-assumptions "An approach under which each significant assumption used reflects the best estimate of the plan's future experience solely with respect to that assumption. See Implicit Approach to Assumptions."). That is, each significant assumption used shall reflect the best estimate solely with respect to that individual assumption. All assumptions shall presume that the plan will continue in effect in the absence of evidence that it will not continue. Actuarial assumptions reflect the time value of money (discount rate) and the probability of payment (assumptions as to mortality, turnover, early retirement, and so forth). ##### [715-30-35-43](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-43) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:ddf82585fe358ae285b3a00a7cc193319a2ca957a680cee1661f24d4a10eb068 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assumed discount rates shall reflect the rates at which the pension benefits could be effectively settled. It is appropriate in estimating those rates to look to available information about rates implicit in current prices of [annuity contracts](https://asc.understandingaccounting.org/glossary/a/#annuity-contract "A contract in which an insurance entity unconditionally undertakes a legal obligation to provide specified pension benefits to specific individuals in return for a fixed consideration or premium. An annuity contract is irrevocable and involves the transfer of significant risk from the employer to the insurance entity. Annuity contracts are also called allocated contracts.") that could be used to effect [settlement](https://asc.understandingaccounting.org/glossary/s/#settlement-of-a-pension-or-postretirement-benefit-obligation "A transaction that is an irrevocable action, relieves the employer (or the plan) of primary responsibility for a pension or postretirement benefit obligation, and eliminates significant risks related to the obligation and the assets used to effect the settlement.") of the obligation (including information about available annuity rates published by the Pension Benefit Guaranty Corporation). In making those estimates, employers may also look to rates of return on high-quality fixed-income investments currently available and expected to be available during the period to maturity of the pension benefits. Assumed discount rates are used in measurements of the projected, accumulated, and vested benefit obligations and the service and interest cost components of net periodic pension cost. ##### [715-30-35-44](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-44) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:9a3e5c97ef882464f13355bb62ff1a45c987247d72c297e7caae11c48d84672c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [715-30-35-43](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-43) permits an employer to look to rates of return on high-quality fixed-income investments in determining assumed discount rates. The objective of selecting assumed discount rates using that method is to measure the single amount that, if invested at the measurement date in a portfolio of high-quality debt instruments, would provide the necessary future cash flows to pay the pension benefits when due. Notionally, that single amount, the projected benefit obligation, would equal the fair value of a portfolio of high-quality zero coupon bonds whose maturity dates and amounts would be the same as the timing and amount of the expected future benefit payments. Because cash inflows would equal cash outflows in timing and amount, there would be no reinvestment risk in the yields to maturity of the portfolio. However, in other than a zero coupon portfolio, such as a portfolio of long-term debt instruments that pay semiannual interest payments or whose maturities do not extend far enough into the future to meet expected benefit payments, the assumed discount rates (the yield to maturity) need to incorporate expected reinvestment rates available in the future. Those rates shall be extrapolated from the existing yield curve at the measurement date. The determination of the assumed discount rate is separate from the determination of the expected rate of return on plan assets whenever the actual portfolio differs from the hypothetical portfolio described in this paragraph. Assumed discount rates shall be reevaluated at each measurement date. If the general level of interest rates rises or declines, the assumed discount rates shall change in a similar manner. ##### [715-30-35-45](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-45) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:e646804304363276333d4d8d1f4df2314cd02c85a17e313f0a9449d4b6b12595 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Interest rates vary depending on the duration of investments; for example, U.S. Treasury bills, 7-year bonds, and 30-year bonds have different interest rates. Thus, the weighted-average discount rate (interest rate) inherent in the prices of annuities (or a dedicated bond portfolio) will vary depending on the length of time remaining until individual benefit payment dates. A plan covering only retired employees would be expected to have significantly different discount rates from one covering a work force of 30-year-olds. The disclosures required by Subtopic 715-20 regarding components of the pension benefit obligation will be more representationally faithful if individual discount rates applicable to various benefit deferral periods are selected. A properly weighted average rate can be used for aggregate computations such as the interest cost component of net pension cost for the period. ##### [715-30-35-46](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-46) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:6d8f33b02fc78528bfb143a23ad2b3ec6f4107c2db9b77848371284ac8eab214 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An insurance entity deciding on the price of an annuity contract will consider the rates of return available to it for investing the premium received and the rates of return expected to be available to it for reinvestment of future cash flows from the initial investment during the period until benefits are payable. That consideration is indicative of a relationship between rates inherent in the prices of annuity contracts and rates available in investment markets. Therefore, it is appropriate for employers to consider that relationship and information about investment rates in estimating the discount rates required for application of this Subtopic. Thus a current settlement rate best meets that objective and is consistent with measurement of plan assets at fair value for purposes of recognizing as a net asset or a net liability, and disclosing the plan's funded status. Each year the discount rates shall be reevaluated to determine whether they reflect the best estimate of the current effective settlement rates. As established in paragraph [715-30-35-44](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-44), if interest rates generally decline or rise, the assumed discount rates shall change. ##### [715-30-35-47](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-47) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:a9596a14dd38f4da73238d63c5b9eab1346c42e9bdb90cb1446a8949bcfa6416 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The [expected long-term rate of return on plan assets](https://asc.understandingaccounting.org/glossary/e/#expected-long-term-rate-of-return-on-plan-assets "An assumption about the rate of return on plan assets reflecting the average rate of earnings expected on existing plan assets and expected contributions to the plan during the period.") shall reflect the average rate of earnings expected on the funds invested or to be invested to provide for the benefits included in the projected benefit obligation. In estimating that rate, appropriate consideration shall be given to the returns being earned by the plan assets in the [fund](https://asc.understandingaccounting.org/glossary/f/#fund "Used as a verb, to pay over to a funding agency (as to fund future pension benefits or to fund pension cost). Used as a noun, assets accumulated in the hands of a funding agency for the purpose of meeting pension benefits when they become due.") and the rates of return expected to be available for reinvestment. The expected long-term rate of return on plan assets is used (with the market-related value of assets) to compute the expected return on assets. In the context of its use in this paragraph, funds to be invested refers only to the reinvestment of returns on existing plan assets. ##### [715-30-35-48](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-48) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:57ab499cbd899695284e0f9d55ebb910c5a08aa2c3093d84ba595a4da7cbcec1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The expected return on plan assets shall take into consideration the availability of all plan assets for investment throughout the year. Therefore, the amount and timing of pension plan contributions and benefit payments expected to be made during the year shall be considered in determining the expected return on plan assets for that year. For example, if the employer's pension plan contribution for the year is expected to be made two months before the next measurement date, then the expected return on plan assets shall include an amount related to the expected return on that contribution only for those two months. ##### [715-30-35-49](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-49) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:2907c2650b2f016f893a32b37f5c8c87ab64673ec7f0fae6160c0bb50dd81e5e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. However, the expected return on future years' contributions to a pension plan shall not be considered in determining the expected long-term rate of return on plan assets. The expected long-term rate of return on plan assets shall reflect long-term earnings expectations only on existing plan assets and those contributions expected to be received during the current year. #### Measurement of Plan Assets ##### [715-30-35-50](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-50) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:eb4c4ff1adeb0ca6ab4696234331597c073128c84a4464e58f06547389381fad Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For purposes of applying the [plan-asset-related](https://asc.understandingaccounting.org/glossary/p/#plan-assets "Assets—usually stocks, bonds, and other investments—that have been segregated and restricted, usually in a trust, to provide for pension benefits. The amount of plan assets includes amounts contributed by the employer, and by employees for a contributory plan, and amounts earned from investing the contributions, less benefits paid. Plan assets ordinarily cannot be withdrawn by the employer except under certain circumstances when a plan has assets in excess of obligations and the employer has taken certain steps to satisfy existing obligations. Assets not segregated in a trust or otherwise effectively restricted so that they cannot be used by the employer for other purposes are not plan assets even though it may be intended that such assets be used to provide pensions. If a plan has liabilities other than for benefits, those nonbenefit obligations may be considered as reductions of plan assets. Amounts accrued by the employer but not yet paid to the plan are not plan assets. Securities of the employer held by the plan are includable in plan assets provided they are transferable.") provisions of paragraph [715-30-25-1](https://asc.understandingaccounting.org/asc/715/30/#715-30-25-1) and for purposes of the disclosures required by paragraphs [715-20-50-1](https://asc.understandingaccounting.org/asc/715/20/#715-20-50-1) and [715-20-50-5](https://asc.understandingaccounting.org/asc/715/20/#715-20-50-5), plan investments, whether equity or debt securities, real estate, or other, shall be measured at their fair value as of the measurement date. The fair value of an investment shall be reduced by brokerage commissions and other costs normally incurred in a sale if those costs are significant (similar to fair value less cost to sell). ##### [715-30-35-51](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-51) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:6755ae23fdab132b874b19ba349c3b443cd4d6fc506cdcc846bc035adc9d2e4e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For purposes of determining the expected return on plan assets and accounting for asset gains and losses pursuant to paragraphs [715-30-35-18 through 35-26](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-18) , a [market-related asset value](https://asc.understandingaccounting.org/glossary/m/#market-related-value-of-plan-assets "A balance used to calculate the expected return on plan assets. The market-related value of plan assets is either fair value or a calculated value that recognizes changes in fair value in a systematic and rational manner over not more than five years. Different ways of calculating market-related value may be used for different classes of assets (for example, an employer might use fair value for bonds and a five-year-moving-average value for equities), but the manner of determining market-related value is required to be applied consistently from year to year for each asset class. For a method to meet the criteria of being systematic and rational, it must reflect only the changes in the fair value of plan assets between various dates.") is used. ##### [715-30-35-52](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-52) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:46203b7e6e645cda6ba77207e5e281d4b9d7b6694f9d5aeaeac79466e6edd602 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Plan assets used in plan operations (for example, buildings, equipment, furniture and fixtures, and leasehold improvements) shall be measured at cost less accumulated depreciation or amortization for all purposes. #### Annuity and Other Contracts ##### [715-30-35-53](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-53) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:f37cd897f3dd13b8d653b2c4232a944a8e65e2375182ae9c83c31e35524f3714 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [715-30-25-7](https://asc.understandingaccounting.org/asc/715/30/#715-30-25-7) provides that to the extent that benefits currently earned are covered by annuity contracts, the cost of those benefits shall be the cost of purchasing the contracts, except for the cost of the [participation right](https://asc.understandingaccounting.org/glossary/p/#participation-right "A purchaser's right under a participating insurance contract to receive future dividends or retroactive rate credits from the insurance entity.") when participating annuity contracts are used (see paragraph [715-30-35-57](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-57)). That is, if all the benefits attributed by the plan's benefit formula to service in the current period are covered by nonparticipating annuity contracts, the cost of the contracts determines the service cost component of net pension cost for that period. Benefits covered by annuity contracts shall be excluded from the projected benefit obligation and the accumulated benefit obligation. Except for participation rights, annuity contracts shall be excluded from plan assets. ##### [715-30-35-54](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-54) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:2245457764aece4e5a9fda2f3319d546ea36283f3a3cdf495d4ba3a272431506 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the insurance entity obligated under an annuity contract is a [captive insurer](https://asc.understandingaccounting.org/glossary/c/#captive-insurer "An insurance entity that does business primarily with related entities."), or if there is any reasonable doubt that the insurance entity will meet its obligations under the contract, the contract is not an annuity contract for purposes of this Subsection. ##### [715-30-35-55](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-55) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:52a1a8d2eb1ce6d9dfd7345408aeb25e042cd7591bc3af30465acbe8d5ab3de2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Benefits provided by the pension benefit formula beyond benefits provided by annuity contracts (for example, benefits related to future compensation levels) shall be accounted for according to the provisions of this Subtopic applicable to plans not involving insurance contracts. ##### [715-30-35-56](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-56) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:9fb01dc32fd2dd4ad547ace81b390addb5d1e6dfcdf188bf0e938f0c108b78a0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Some contracts provide for a refund of premiums if an employee for whom an annuity is purchased does not render sufficient service for the benefit to vest under the terms of the plan. Such a provision shall not by itself preclude a contract from being treated as an annuity contract for purposes of this Subtopic. ##### [715-30-35-57](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-57) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:e86779c8ad3317e497812ccf9a88383ede2df0136cb14e655e31ec6ca7951b4f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Participating annuity contracts provide that the purchaser (either the plan or the employer) may participate in the experience of the insurance entity. Under those contracts, the insurance entity ordinarily pays dividends to the purchaser, the effect of which is to reduce the cost of the plan. The purchase price of a [participating annuity contract](https://asc.understandingaccounting.org/glossary/p/#participating-annuity-contract "An annuity contract that provides for the purchaser to participate in the investment performance and possibly other experience (for example, mortality experience) of the insurance entity. Under a participating annuity contract, the insurance entity ordinarily pays dividends to the purchaser.") ordinarily is higher than the price of an equivalent contract without participation rights. The difference is the cost of the participation right. ##### [715-30-35-58](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-58) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:c278ab980e4a4f12a3e75e38c6a9c3cf97ebfa0bf59ad641749688208c821099 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In subsequent periods, the participation right shall be measured at its fair value if the contract is such that fair value is reasonably estimable. Otherwise, the participation right shall be measured at its amortized cost (not in excess of its net realizable value), and the cost shall be amortized systematically over the expected dividend period under the contract. ##### [715-30-35-59](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-59) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:81632fb4b9d60cd05812833f845aa80b8d64af540946805f5968a38d93107c38 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the substance of a [participating insurance](https://asc.understandingaccounting.org/glossary/p/#participating-insurance "Insurance in which the policyholder is entitled to participate in the earnings or surplus of the insurance entity. The participation occurs through the distribution of dividends to policyholders.") contract is such that the employer remains subject to all or most of the risks and rewards associated with the benefit obligation covered and the assets transferred to the insurance entity, that contract is not an annuity contract for purposes of this Subtopic. ##### [715-30-35-60](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-60) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:f7533d837586734361a07463dc18899e2fb1d441faff4f9022818e305e8da145 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Insurance contracts that are in substance equivalent to the purchase of annuities shall be accounted for as such. Other contracts with insurance entities shall be accounted for as investments and measured at fair value. For some contracts, the best available evidence of fair value may be contract value. If a contract has a determinable cash surrender value or conversion value, that is presumed to be its fair value. ##### [715-30-35-61](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-61) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:cec3afd019748d98a9980f19ab3f1a82fbf1db83879fdb17b074e6f24fc14bf2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [715-30-35-54](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-54) identifies attributes related to the issuers of annuity contracts that preclude accounting for the contracts as annuity contracts. The Settlements, Curtailments, and Certain Termination Benefits Subsections of this Subtopic define attributes related to annuity contracts differently for purposes of accounting for them as annuity contracts. The effect of the difference is that paragraph [715-30-35-85](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-85) excludes from settlement accounting those annuity contracts purchased from an entity that is controlled by the employer, whereas this Subsection excludes from annuity contracts those purchased from a captive insurer. #### Timing of Measurement ##### [715-30-35-62](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-62) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:46093a990975b0f73f40f6eaa3082c6b4d9ec58c81598ebf559bb00ffb63527e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The measurements of plan assets and benefit obligations required by this Subtopic shall be as of the date of the employer's fiscal year-end statement of financial position except in both of the following cases: 1. a The plan is sponsored by a subsidiary that is consolidated using a fiscal period that differs from its parent's, as permitted by paragraph [810-10-45-12](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-12). 2. b The plan is sponsored by an investee that is accounted for using the equity method of accounting under paragraph [323-10-35-6](https://asc.understandingaccounting.org/asc/323/10/#323-10-35-6), using financial statements of the investee for a fiscal period that is different from the investor's, as permitted by that Subtopic. ##### [715-30-35-63](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-63) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:f4789191da946fd1206efba8a47f909a4bb7d43fa71451d44c3d529966467805 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the exceptions in the preceding paragraph apply, the employer shall measure the subsidiary's plan assets and benefit obligations as of the date used to consolidate the subsidiary's statement of financial position and shall measure the investee's plan assets and benefit obligations as of the date of the investee's financial statements used to apply the equity method. For example, if a calendar year-end parent consolidates a subsidiary using the subsidiary's September 30 financial statements, the funded status of the subsidiary's benefit plan included in the consolidated financial statements shall be measured as of September 30. ##### [715-30-35-63A](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-63A) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:71454be469a3ffc2ee6a7296990b963cec63d203e551c445d19ca0fac4969279 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If an employer's fiscal year-end does not coincide with a month-end, the employer may measure plan assets and benefit obligations using the month-end that is closest to the employer's fiscal year-end. That election shall be applied consistently from year to year. The election shall be applied consistently to all of its defined benefit plans if an employer has more than one defined benefit plan. ##### [715-30-35-63B](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-63B) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:dd49879692452b76ae73230fd9f1c9ea0b440588e6fe13701a5c4d136d900b45 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If an employer measures plan assets and benefit obligations in accordance with paragraph [715-30-35-63A](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-63A) and a contribution or significant event caused by the employer (such as a plan amendment, settlement, or curtailment that calls for a remeasurement) occurs between the month-end date used to measure plan assets and benefit obligations and the employer's fiscal year-end, the employer shall adjust the fair value of plan assets and the actuarial present value of benefit obligations so that those contributions or significant events are recognized in the period in which they occurred. An employer shall not adjust the fair value of plan assets and the actuarial present value of benefit obligations for other events occurring between the month-end date used to measure plan assets and benefit obligations and the employer's fiscal year-end that may be significant to the measurement of defined benefit plan assets and obligations, but are not caused by the employer (for example, changes in market prices or interest rates). ##### [715-30-35-64](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-64) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:b484755685efbd0a93ad4ccaf9ec5472bacf06e7464f20dcb37e44bbc5f2beb0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Requiring that the pension measurements be as of a particular date is not intended to require that all procedures be performed after that date. As with other financial statement items requiring estimates, much of the information can be prepared as of an earlier date and projected forward to account for subsequent events (for example, employee service). ##### [715-30-35-65](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-65) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:10749e937bd273ef101d123780b29e9db794f8a9e68f8566a659952d0dc74937 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Unless an entity remeasures both its plan assets and benefit obligations during the fiscal year, the funded status it reports in its interim-period statement of financial position shall be the same asset or liability recognized in the previous year-end statement of financial position adjusted for both of the following: 1. a Subsequent accruals of net periodic pension cost that exclude the amortization of amounts previously recognized in other comprehensive income (for example, subsequent accruals of service cost, interest cost, and return on plan assets) 2. b Contributions to a funded plan, or benefit payments. ##### [715-30-35-66](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-66) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:9677cf7ddba40f6c4840bb2900c1e12f9670236ee90bb57dbf22fdfad76dd93f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [715-30-25-5](https://asc.understandingaccounting.org/asc/715/30/#715-30-25-5) notes that, sometimes, an entity remeasures both plan assets and benefit obligations during the fiscal year, for example, when a significant event such as a plan amendment, settlement, or curtailment occurs that calls for a remeasurement. ##### [715-30-35-66A](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-66A) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:89bbdccdf969746c6d4b7007d553daa4f6dcc5fa39a1fdf2af72280a0264a8fb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a significant event caused by the employer (such as a plan amendment, settlement, or curtailment) that requires an employer to remeasure both plan assets and benefit obligations does not coincide with a month-end, the employer may remeasure plan assets and benefit obligations using the month-end that is closest to the date of the significant event. ##### [715-30-35-66B](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-66B) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:6362d1bf2197ed371f2e9a436fd4375cab8213f0bb977af922fd1f59579f36ee Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If an employer remeasures plan assets and benefit obligations during the fiscal year in accordance with paragraph [715-30-35-66A](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-66A), the employer shall adjust the fair value of plan assets and the actuarial present value of benefit obligations for any effects of the significant event that may or may not be captured in the month-end measurement (for example, if the closest month-end is before the date of a partial settlement, then the measurement of plan assets may include assets that are no longer part of the plan). An employer shall not adjust the fair value of plan assets and the actuarial present value of benefit obligations for other events occurring between the month-end date used to measure plan assets and benefit obligations and the employer's fiscal year-end that may be significant to the measurement of defined benefit plan assets and obligations, but are not caused by the employer (for example, changes in market prices or interest rates). ##### [715-30-35-67](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-67) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:15c814d43a76a02b9141d39ba38bf369549390df08dfc337dd14c0c312a6050f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As required by paragraph [715-30-25-5](https://asc.understandingaccounting.org/asc/715/30/#715-30-25-5), upon remeasurement, an entity shall adjust its statement of financial position in a subsequent interim period to reflect the overfunded or underfunded status of the plan consistent with that measurement date. ##### [715-30-35-68](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-68) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:026fb0ec484a9e20f290db214063aa0ab96f29130955224f3b2d59c9bbbd2fd7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Measurements of net periodic pension cost for both interim and annual financial statements shall be based on the assumptions used for the previous year-end measurements unless more recent measurements of both plan assets and obligations are available or a significant event occurs, such as a plan amendment, that would ordinarily call for such measurements. #### Employers with Two or More Plans ##### [715-30-35-69](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-69) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:59f7cb6a7536c156d88fe0c0be82e93eeedad39de19a92cc8c5f775e0ffee095 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Net periodic pension cost, liabilities, and assets are determined on a plan-by-plan basis. Paragraph [715-30-25-6](https://asc.understandingaccounting.org/asc/715/30/#715-30-25-6) requires that an employer that sponsors two or more separate defined benefit pension plans determine net periodic pension cost, liabilities, and assets by separately applying the provisions of this Subtopic to each plan. #### Multiple-Employer Plans ##### [715-30-35-70](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-70) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:274bb8f374412e89b00609e4579163a2237b98daeb793441b23a3eb5059b3d5a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Some pension plans to which two or more unrelated employers contribute are not multiemployer plans. Rather, they are in substance aggregations of [single-employer plans](https://asc.understandingaccounting.org/glossary/s/#single-employer-plan "A pension plan or other postretirement benefit plan that is maintained by one employer. The term also may be used to describe a plan that is maintained by related parties such as a parent and its subsidiaries.") combined to allow participating employers to pool their assets for investment purposes and to reduce the costs of plan administration. Those [multiple-employer plans](https://asc.understandingaccounting.org/glossary/m/#multiple-employer-plan "A pension plan or other postretirement benefit plan maintained by more than one employer but not treated as a multiemployer plan. Multiple-employer plans are generally not collectively bargained and are intended to allow participating employers, commonly in the same industry, to pool their plan assets for investment purposes and to reduce the cost of plan administration. A multiple-employer plan maintains separate accounts for each employer so that contributions provide benefits only for employees of the contributing employer. Multiple-employer plans may have features that allow participating employers to have different benefit formulas, with the employer's contributions to the plan based on the benefit formula selected by the employer.") ordinarily do not involve collective-bargaining agreements. They may also have features that allow participating employers to have different benefit formulas, with the employer's contributions to the plan based on the benefit formula selected by the employer. Such plans shall be considered single-employer plans rather than multiemployer plans for purposes of this Subtopic, and each employer's accounting shall be based on its respective interest in the plan. #### Cash Balance Plans ##### [715-30-35-71](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-71) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:875fd96252fd8e7d76efda7ea51df577e5cd27065ab24e2a8932e4d660d9071e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-10](https://asc.understandingaccounting.org/updates/asu-2020-10/) ##### [715-30-35-72](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-72) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:d382741e4badc7b5a09f86aeb0d84cae8bdbc6e47ad2554ea1c9392f58a16a68 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-10](https://asc.understandingaccounting.org/updates/asu-2020-10/) #### Transfer of Excess Pension Assets to a Retiree Health Care Benefits Account ##### [715-30-35-73](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-73) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:501e797b9614edf8cf93c3d41b7a4764035821fbb859d3a99693043a6b2c9982 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The transfer of excess pension assets to a retiree health care account or plan (whether or not the transfer of assets is made pursuant to applicable laws or regulations) shall be recognized as a negative contribution to (withdrawal of funds from) the pension plan and a positive contribution to the retiree health care plan. No gain or loss arises from the transfer of the excess pension assets. ### Settlements, Curtailments, and Certain Termination Benefits #### Relationship of Settlements and Curtailments to Other Events ##### [715-30-35-74](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-74) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:00a25c2d9ef5fdaf45706c1665cba8a3375149b305b314181a91c6346cc89880 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A [settlement](https://asc.understandingaccounting.org/glossary/s/#settlement-of-a-pension-or-postretirement-benefit-obligation "A transaction that is an irrevocable action, relieves the employer (or the plan) of primary responsibility for a pension or postretirement benefit obligation, and eliminates significant risks related to the obligation and the assets used to effect the settlement.") and a [curtailment](https://asc.understandingaccounting.org/glossary/c/#plan-curtailment "An event that significantly reduces the expected years of future service of present employees or eliminates for a significant number of employees the accrual of defined benefits for some or all of their future services.") may occur separately or together. ##### [715-30-35-75](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-75) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:99298e2deb5245c174fcea308dbe3846e466214745e82f3268d59dd6bc1ea0ed Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subsection does not establish a proper sequence of events to follow in measuring the effects of a settlement and a curtailment that are to be recognized at the same time. Although the sequence selected can affect the determination of the aggregate [gain or loss](https://asc.understandingaccounting.org/glossary/g/#gain-or-loss "A change in the value of either the benefit obligation (projected benefit obligation for pension plans or accumulated postretirement benefit obligation for other postretirement benefit plans) or the plan assets resulting from experience different from that assumed or from a change in an actuarial assumption, or the consequence of a decision to temporarily deviate from the other postretirement benefit substantive plan. Gains or losses that are not recognized in net periodic pension cost or net periodic postretirement benefit cost when they arise are recognized in other comprehensive income. Those gains or losses are subsequently recognized as a component of net periodic pension cost or net periodic postretirement benefit cost based on the recognition and amortization provisions of Subtopic 715-30 or Subtopic 715-60.") recognized, the selection of the event to be measured first (settlement or curtailment) is an arbitrary decision and neither order is demonstrably superior to the other. However, an employer shall consistently apply the same sequence of events in determining the effects of all settlements and curtailments that are to be recognized at the same time. ##### [715-30-35-76](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-76) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:685f16449a153a3b8f23a1a8d2fa2f9a639d36a05c6a4467d910656c6151181b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If [benefits](https://asc.understandingaccounting.org/glossary/b/#benefits "The monetary or in-kind benefits or benefit coverage to which participants may be entitled under a pension plan or a health and welfare plan (which can include active, terminated, and retired employees or their dependents or beneficiaries). Examples of benefits may include, but are not limited to, health care benefits, life insurance, legal, educational, and advisory services, pension benefits, disability benefits, death benefits, and benefits due to termination of employment.") to be accumulated in future periods are reduced (for example, because half of a work force is dismissed or a plant is closed) but the plan remains in existence and continues to pay benefits, to invest assets, and to receive contributions, a curtailment has occurred but not a settlement. ##### [715-30-35-77](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-77) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:9357a2d0ce3e30927d30aff9a502f675f5883a603076e2fb234572f85ed06bea Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If an employer purchases nonparticipating annuity contracts for [vested benefits](https://asc.understandingaccounting.org/glossary/v/#vested-benefits "Benefits for which the employee's right to receive a present or future pension benefit is no longer contingent on remaining in the service of the employer. (Other conditions, such as inadequacy of the pension fund, may prevent the employee from receiving the vested benefit.) Under graded vesting, the initial vested right may be to receive in the future a stated percentage of a pension based on the number of years of accumulated credited service; thereafter, the percentage may increase with the number of years of service or of age until the right to receive the entire benefit has vested.") and continues to provide defined benefits for future [service](https://asc.understandingaccounting.org/glossary/s/#service "Employment taken into consideration under a pension plan. Years of employment before the inception of a plan constitute an employee's past service; years thereafter are classified in relation to the particular actuarial valuation being made or discussed. Years of employment (including past service) before the date of a particular valuation constitute prior service; years of employment following the date of the valuation constitute future service; a year of employment adjacent to the date of valuation, or in which such date falls, constitutes current service."), either in the same plan or in a successor plan, a settlement has occurred but not a curtailment. ##### [715-30-35-78](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-78) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:45330aa94f42951c1cbddd12df121da6eac1a4278810d1775ec22ca36f1a38c6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a plan is terminated (that is, the obligation is settled and the plan ceases to exist) and not replaced by a successor defined benefit plan, both a settlement and a curtailment have occurred (whether or not the employees continue to work for the employer). See Example 1 (paragraph [715-30-55-198](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-198)) for an illustration of this situation. #### Settlements ##### [715-30-35-79](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-79) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:dbeb107bc30d536744592b966350d77b83f76f6e7225355bf073b6433a54eb22 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The maximum gain or loss subject to recognition in earnings when a pension obligation is settled is the net gain or loss remaining in accumulated other comprehensive income plus any transition asset remaining in accumulated other comprehensive income from initial application of this Subtopic. That maximum amount includes any gain or [loss](https://asc.understandingaccounting.org/glossary/l/#loss "See Gain or Loss.") first measured at the time of settlement. The maximum amount shall be recognized in earnings if the entire [projected benefit obligation](https://asc.understandingaccounting.org/glossary/p/#projected-benefit-obligation "The actuarial present value as of a date of all benefits attributed by the pension benefit formula to employee service rendered before that date. The projected benefit obligation is measured using assumptions as to future compensation levels if the pension benefit formula is based on those future compensation levels (pay-related, final-pay, final-average-pay, or career-average-pay plans).") is settled. If only part of the projected benefit obligation is settled, the employer shall recognize in earnings a pro rata portion of the maximum amount equal to the percentage reduction in the projected benefit obligation. If the purchase of a [participating annuity contract](https://asc.understandingaccounting.org/glossary/p/#participating-annuity-contract "An annuity contract that provides for the purchaser to participate in the investment performance and possibly other experience (for example, mortality experience) of the insurance entity. Under a participating annuity contract, the insurance entity ordinarily pays dividends to the purchaser.") constitutes a settlement under the guidance in paragraphs [715-30-35-85 through 35-89](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-85) , the maximum gain (but not the maximum loss) shall be reduced by the cost of the [participation right](https://asc.understandingaccounting.org/glossary/p/#participation-right "A purchaser's right under a participating insurance contract to receive future dividends or retroactive rate credits from the insurance entity.") before determining the amount to be recognized in earnings. ##### [715-30-35-80](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-80) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:6bedda7857fbc63565a3e135dbd0ec3fc17a924e498bd6544396f54cd36ed02e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Example 2 (paragraph [715-30-55-202](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-202)) for illustrations of the settlement related guidance presented in this Subsection. ##### [715-30-35-81](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-81) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:00d44bfb10c6e8a0a399b7fa7775014f497d0205fbe0da9373adf06fcef04b7c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Plan assets](https://asc.understandingaccounting.org/glossary/p/#plan-assets "Assets—usually stocks, bonds, and other investments—that have been segregated and restricted, usually in a trust, to provide for pension benefits. The amount of plan assets includes amounts contributed by the employer, and by employees for a contributory plan, and amounts earned from investing the contributions, less benefits paid. Plan assets ordinarily cannot be withdrawn by the employer except under certain circumstances when a plan has assets in excess of obligations and the employer has taken certain steps to satisfy existing obligations. Assets not segregated in a trust or otherwise effectively restricted so that they cannot be used by the employer for other purposes are not plan assets even though it may be intended that such assets be used to provide pensions. If a plan has liabilities other than for benefits, those nonbenefit obligations may be considered as reductions of plan assets. Amounts accrued by the employer but not yet paid to the plan are not plan assets. Securities of the employer held by the plan are includable in plan assets provided they are transferable.") and the projected benefit obligation shall be measured as of the date the settlement occurs (that is, as of the date that the criteria for a settlement are met and settlement accounting becomes appropriate) to determine the maximum gain or loss subject to pro rata recognition in earnings and the percentage reduction in the projected benefit obligation. The effects of a settlement can be reliably measured only if based on measures of plan assets and the projected benefit obligation as of the date of the settlement because intervening events (such as investment gains or losses, or gains or losses from changes in interest rates) after a prior measurement date could change the relevant amounts. ##### [715-30-35-82](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-82) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:157c3762671e4ac23d87964b6a9c3623676c37b1b070f0d9b57c274ac358af58 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Recognition in earnings of gains or losses from settlements is required if the cost of all settlements during a year is greater than the sum of the service cost and interest cost components of [net periodic pension cost](https://asc.understandingaccounting.org/glossary/n/#net-periodic-pension-cost "The amount recognized in an employer's financial statements as the cost of a pension plan for a period. Components of net periodic pension cost are service cost, interest cost, actual return on plan assets, gain or loss, amortization of prior service cost or credit, and amortization of the transition asset or obligation existing at the date of initial application of Subtopic 715-30. The term net periodic pension cost is used instead of net pension expense because the service cost component recognized in a period may be capitalized as part of an asset such as inventory.") for the pension plan for the year. However, if the cost of all settlements in a year is less than or equal to the sum of the service cost and interest cost components of net periodic pension cost for the plan for the year, gain or loss recognition in earnings is permitted but not required for those settlements. The accounting policy adopted for recognition in earnings of gains or losses from settlements shall be applied consistently from year to year. ##### [715-30-35-83](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-83) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:a15cad444d1a252e6c04a977004178d5acd2fe52ccf4f1faaea411054e422e4d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The cost of a settlement is determined as follows for each of the different settlement types: 1. a For a cash settlement, the amount of cash paid to employees 2. b For a settlement using nonparticipating annuity contracts, the cost of the contracts 3. c For a settlement using participating annuity contracts, the cost of the contracts less the amount attributed to participation rights. See paragraph [715-30-35-57](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-57). ##### [715-30-35-84](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-84) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:99ea69c6da8dbe176ef656e505b99d4e57f3de5407b5edb44e9f429fa2c908e3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The intent of the guidance in this Subsection is that if the substance of an insurance contract is such that the employer remains subject to all or most of the risks and rewards associated with the covered pension benefit obligation or the assets transferred to the insurance entity, the purchase of the contract does not constitute a settlement. The circumstances under which an employer shall recognize in earnings the net gain or loss included in accumulated other comprehensive income are limited and such recognition shall not occur if the settlement transaction is between an employer and an entity that it controls because such a transaction merely shifts the risks from one part of the entity to another part of the same entity. ##### [715-30-35-85](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-85) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:2e15bf38c03ca114dab109a06d4b32d42bbb8021b06aad2ab51d0494c98bf026 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Annuity contracts](https://asc.understandingaccounting.org/glossary/a/#annuity-contract "A contract in which an insurance entity unconditionally undertakes a legal obligation to provide specified pension benefits to specific individuals in return for a fixed consideration or premium. An annuity contract is irrevocable and involves the transfer of significant risk from the employer to the insurance entity. Annuity contracts are also called allocated contracts.") purchased from an entity that is controlled by the employer are excluded from settlement accounting. Therefore, an employer that purchases annuity contracts from an insurance entity that it controls shall not recognize any settlement gain or loss associated with the transaction (that is, the transaction does not qualify for settlement accounting). ##### [715-30-35-86](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-86) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:704b01a73688b6faa2cb0d29e0582a63e8002a432b0ebbcb2940ff8f405ff5d8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If there is any reasonable doubt that the insurance entity will meet its obligations under the annuity contract, the purchase of the contract does not constitute a settlement. ##### [715-30-35-87](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-87) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:e67cfb820c7dd222953ee7996e4f1ceb39e95998332c13304306266d08530792 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the substance of a [participating annuity contract](https://asc.understandingaccounting.org/glossary/p/#participating-annuity-contract "An annuity contract that provides for the purchaser to participate in the investment performance and possibly other experience (for example, mortality experience) of the insurance entity. Under a participating annuity contract, the insurance entity ordinarily pays dividends to the purchaser.") is such that the employer remains subject to all or most of the risks and rewards associated with the benefit obligation covered or the assets transferred to the insurance entity, the purchase of the contract does not constitute a settlement. ##### [715-30-35-88](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-88) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:c7c41ec636fb34bf6af79b761aa08f70c74578d0039d3280015577b61c687bcf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. It may be difficult to determine the extent to which a participating annuity contract exposes the purchaser to the risk of unfavorable experience, which would be reflected in lower than expected future dividends. Additionally, under some annuity contracts described as participating, the purchaser might remain subject to all or most of the same risks and rewards related to future experience that would have existed had the contract not been purchased. Some [participating insurance](https://asc.understandingaccounting.org/glossary/p/#participating-insurance "Insurance in which the policyholder is entitled to participate in the earnings or surplus of the insurance entity. The participation occurs through the distribution of dividends to policyholders.") contracts may require or permit payment of additional premiums if experience is unfavorable. Accordingly, if a participating insurance contract requires or permits payment of additional premiums because of experience losses, or if the substance of the contract is such that the purchaser retains all or most of the related risks and rewards, the purchase of that contract does not constitute a settlement. ##### [715-30-35-89](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-89) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:a1d1cf609588d0183a121331c1fcaae1796c621d0d5b48a14c87f10dd6195692 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An employer may decide to make up a deficiency in annuity contract payments following a settlement and subsequent insolvency by the insurance entity. The following guidance addresses how the employer shall account for the cost of making up the deficiency in annuity payments to the retirees. ##### [715-30-35-90](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-90) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:8b41f087c453f36b7144fcd6e01fbbbf0b6bc6a2f3177da1e5ac87aab8b5f183 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following circumstances identify the fact pattern to which the required accounting would apply. An employer sponsors a [defined benefit pension plan](https://asc.understandingaccounting.org/glossary/d/#defined-benefit-plan "A defined benefit plan provides participants with a determinable benefit based on a formula provided for in the plan. Defined benefit health and welfare plans—Defined benefit health and welfare plans specify a determinable benefit, which may be in the form of a reimbursement to the covered plan participant or a direct payment to providers or third-party insurers for the cost of specified services. Such plans may also include benefits that are payable as a lump sum, such as death benefits. The level of benefits may be defined or limited based on factors such as age, years of service, and salary. Contributions may be determined by the plan's actuary or be based on premiums, actual claims paid, hours worked, or other factors determined by the plan sponsor. Even when a plan is funded pursuant to agreements that specify a fixed rate of employer contributions (for example, a collectively bargained multiemployer plan), such a plan may nevertheless be a defined benefit health and welfare plan if its substance is to provide a defined benefit. Defined benefit pension plan—A pension plan that defines an amount of pension benefit to be provided, usually as a function of one or more factors such as age, years of service, or compensation. Any pension plan that is not a defined contribution pension plan is, for purposes of Subtopic 715-30, a defined benefit pension plan. Defined benefit postretirement plan—A plan that defines postretirement benefits in terms of monetary amounts (for example, $100,000 of life insurance) or benefit coverage to be provided (for example, up to $200 per day for hospitalization, or 80 percent of the cost of specified surgical procedures). Any postretirement benefit plan that is not a defined contribution postretirement plan is, for purposes of Subtopic 715-60, a defined benefit postretirement plan. (Specified monetary amounts and benefit coverage are collectively referred to as benefits.)"). The employer settles its pension obligation through the purchase of insurance annuity contracts from an insurance entity. The employer may or may not terminate the defined benefit pension plan. The employer appropriately applies the guidance in this Subsection. Subsequently, the insurance entity becomes insolvent and is unable to meet all of its obligations under the annuity contracts. The employer decides to make up some portion or all of any deficiency in annuity payments to the retirees. ##### [715-30-35-91](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-91) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:91edc3c46a737f5c836a6718f3f88ef7b6f0ee51a305cba936ec3f332314a9a2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The employer shall recognize a loss in the circumstances described in the preceding paragraph at the time the deficiency is assumed by the employer if any gain was recognized on the original settlement. The loss recognized would be the lesser of any gain recognized on the original settlement or the amount of the benefit obligation assumed by the employer. The excess of the obligation assumed by the employer over the loss recognized shall be accounted for as a [plan amendment](https://asc.understandingaccounting.org/glossary/p/#plan-amendment "A change in the existing terms of a plan or the initiation of a new plan. A plan amendment may increase benefits (a positive plan amendment), or reduce or eliminate benefits (a negative plan amendment), including those benefits attributed to years of service already rendered.") or plan initiation in accordance with paragraphs [715-30-35-10 through 35-17](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-10) . Subsequent accounting shall be in accordance with the provisions of this Subtopic. #### Curtailments ##### [715-30-35-92](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-92) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:e3ed9aeae8517d7ec40533c09a85a28e3ef4ada454406f8531d504eeca784ee6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The [prior service cost](https://asc.understandingaccounting.org/glossary/p/#prior-service-cost "The cost of retroactive benefits granted in a plan amendment. Retroactive benefits are benefits granted in a plan amendment (or initiation) that are attributed by the benefit formula to employee services rendered in periods before the amendment.") included in accumulated other comprehensive income associated with years of service no longer expected to be rendered as the result of a [curtailment](https://asc.understandingaccounting.org/glossary/c/#plan-curtailment "An event that significantly reduces the expected years of future service of present employees or eliminates for a significant number of employees the accrual of defined benefits for some or all of their future services.") is a loss. For example, if a curtailment eliminates half of the estimated remaining future years of service of those who were employed at the date of a prior plan amendment and were expected to receive benefits under the plan, then the loss associated with the curtailment is half of the prior service cost included in accumulated other comprehensive income related to that amendment that has not been amortized as a component of net periodic pension cost. For purposes of applying the provisions of this paragraph, prior service cost includes the cost of retroactive plan amendments (see paragraphs [715-30-35-10 through 35-11](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-10) ) and any transition obligation remaining in accumulated other comprehensive income from initial application of this Subtopic. The calculation of prior service cost associated with services of terminated employees is illustrated in Example 3 (see paragraph [715-30-55-212](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-212)). ##### [715-30-35-93](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-93) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:c690bdcfd42ddc0d4012f2bda77c373b05c7f9148978ca73f4bfbac1175117cd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The projected benefit obligation, exclusive of increases that reflect termination benefits that are excluded from the scope of this paragraph (see paragraphs [715-30-25-9 through 25-13](https://asc.understandingaccounting.org/asc/715/30/#715-30-25-9) ), may be decreased (a gain) or increased (a loss) by a curtailment. To the extent that such a gain exceeds any net loss included in accumulated other comprehensive income (or the entire gain, if a net gain exists), it is a curtailment gain. To the extent that such a loss exceeds any net gain included in accumulated other comprehensive income (or the entire loss, if a net loss exists), it is a curtailment loss. For purposes of applying the provisions of this paragraph, any transition asset remaining in accumulated other comprehensive income from initial application of this Subtopic shall be treated as a net gain and shall be combined with the net gain or loss arising thereafter. See Example 4 (paragraph [715-30-55-216](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-216)) for an illustration of a curtailment if there is a remaining transition asset included in accumulated other comprehensive income. ##### [715-30-35-94](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-94) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:b3e2ce1a9d17e257c1a922dbc5d5ea1a0b9b35a377c63b53f6c78bcf06024945 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the sum of the effects identified in the preceding two paragraphs is a net loss, it shall be recognized in earnings when it is probable that a curtailment will occur and the effects described are reasonably estimable. If the sum of those effects is a net gain, it shall be recognized in earnings when the related employees terminate or the [plan suspension](https://asc.understandingaccounting.org/glossary/p/#plan-suspension "An event in which the pension plan is frozen and no further benefits accrue. Future service may continue to be the basis for vesting of nonvested benefits existing at the date of suspension. The plan may still hold assets, pay benefits already accrued, and receive additional employer contributions for any unfunded benefits. Employees may or may not continue working for the employer.") or amendment is adopted. ##### [715-30-35-95](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-95) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:19649db60f857d53c39d9a63a39caeb5bd2574d2acbd726c053a9d83aa09b389 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a situation also involves termination benefits, the change in the projected benefit obligation due to the curtailment is the difference between the projected benefit obligation for the respective employees before their acceptance of the offer of termination benefits and the projected benefit obligation determined for those employees by applying the normal pension plan formula and assuming no future service because of their termination. See Examples 5 through 6 (paragraphs [715-30-55-222 through 55-230](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-222) ) for an illustration of this guidance. ##### [715-30-35-96](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-96) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:03.442Z to 2026-09-10T01:00:03.442Z Record version: sha256:d9515990ee956e760ab4d00810e1c712dacabdda85b72ed7b92c62401ef91f89 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See also Example 7 (paragraph [715-30-55-231](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-231)) for more illustrations of the curtailment-related guidance presented in this Subsection.