# ASC 715-30: Compensation—Retirement Benefits — Defined Benefit Plans—Pension Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/715/30/) 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): 2026-09-10T00:59:50.700Z to 2026-09-10T01:00:20.275Z Record version: sha256:61b6e84778c7ca74a1a578f44b3b5e7cd8078fbb4d547183c045df697dca7e88 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 715-30: Compensation—Retirement Benefits — Defined Benefit Plans—Pension ### Machine-generated study aids ```json { "summary": "ASC 715-30 governs an employer's accounting for single-employer defined benefit pension plans: it requires the employer to recognize the plan's funded status (projected benefit obligation versus fair value of plan assets) on the balance sheet and to recognize net periodic pension cost made up of service cost, interest cost, actual return on plan assets, and amortization of prior service cost/credit, net gain or loss, and any remaining transition asset or obligation. Gains, losses, and prior service cost are first recognized in other comprehensive income and amortized into net periodic pension cost over time (subject to the 10 percent corridor for net gains and losses). Separate Subsections govern settlements, curtailments, and certain termination benefits, which accelerate recognition in earnings of amounts sitting in accumulated other comprehensive income.", "key_points": [ "An employer recognizes an asset for an overfunded plan and a liability for an underfunded plan equal to the difference between the projected benefit obligation and the fair value of plan assets, aggregating all overfunded plans and, separately, all underfunded plans (715-30-25-1 through 25-2); each plan is accounted for separately and an asset of one plan may not offset a liability of another (715-30-25-6).", "Net periodic pension cost comprises service cost, interest cost, actual return on plan assets, amortization of prior service cost or credit, gain or loss, and amortization of any remaining transition asset or obligation (715-30-35-4), and only the service cost component may be capitalized into inventory or other assets (715-30-35-7A).", "The projected benefit obligation reflects assumed future compensation levels where the benefit formula is pay-related, while the accumulated benefit obligation uses only current and past compensation (715-30-35-1A through 35-2); benefits are attributed to service periods based on the plan's benefit formula (715-30-35-36), with ratable attribution required where the formula back-loads benefits (715-30-35-38).", "Prior service cost from a retroactive plan amendment is charged to other comprehensive income at the amendment date and amortized to net periodic pension cost over the future service periods of active employees expected to receive benefits (715-30-35-11); a retroactive benefit reduction creates a prior service credit applied first against remaining prior service cost (715-30-35-17).", "Gains and losses need not be recognized as they arise; at a minimum, the net gain or loss in accumulated other comprehensive income exceeding 10 percent of the greater of the projected benefit obligation or the market-related value of plan assets must be amortized over the average remaining service period (715-30-35-24), though immediate or other systematic methods are permitted if applied consistently (715-30-35-20, 35-25).", "Assumptions must be explicit best estimates; assumed discount rates reflect the rates at which the pension benefits could be effectively settled and must be reevaluated at each measurement date, and the expected long-term rate of return reflects only existing plan assets and current-year contributions (715-30-35-42 through 35-49).", "On settlement, the maximum gain or loss recognized in earnings is the net gain or loss plus any remaining transition asset in accumulated other comprehensive income, recognized pro rata for a partial settlement (715-30-35-79), and recognition is required only if the cost of all settlements exceeds service cost plus interest cost for the year (715-30-35-82); curtailment losses are recognized when probable and estimable and curtailment gains when employees terminate or the amendment is adopted (715-30-35-94), while special termination benefits are recognized when employees accept the offer (715-30-25-10)." ], "categories": [ "Compensation and benefits", "Recognition", "Subsequent measurement", "Presentation" ], "audience_level": "advanced", "student_note": "Pension accounting is a classic exam trap because two different numbers move at once: the balance sheet reports the full funded status immediately, while the income statement smooths gains, losses, and prior service cost through OCI amortization, with the difference each period running through other comprehensive income. Students commonly confuse the projected benefit obligation (includes future salary assumptions) with the accumulated benefit obligation (does not), and forget that only service cost is eligible for capitalization after ASU 2017-07.", "related_topics": [ "715-20", "715-60", "715-70", "715-10", "740-20", "420" ], "key_concepts": [ "defined benefit pension plan", "projected benefit obligation", "accumulated benefit obligation", "net periodic pension cost", "funded status", "prior service cost", "corridor amortization of net gain or loss", "settlement and curtailment" ] } ``` Source downloaded (UTC): 2026-09-10T00:59:50.700Z to 2026-09-10T00:59:50.700Z Record version: sha256:e8ba3f52dfb419fa1cd5fd26db12e343253cc0550c1b8ff46a19b4309c8001f0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 715-30-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/715/30/#00-status) SEC content: no ##### [715-30-00-1](https://asc.understandingaccounting.org/asc/715/30/#715-30-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:59:50.700Z to 2026-09-10T00:59:50.700Z Record version: sha256:cd27a915000f748c64f2c6555c9aa1fd83d62215c4bce42447912f50c2ac4224 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdatesDate
Actuarial Funding MethodSupersededAccounting Standards Update No. 2017-0703/10/2017
Actuarial Gain or LossSupersededAccounting Standards Update No. 2017-0703/10/2017
Actuarial Gain or LossAmendedAccounting Standards Update No. 2014-0603/14/2014
Allocated ContractSupersededAccounting Standards Update No. 2017-0703/10/2017
Amortization (1st def.)AddedAccounting Standards Update No. 2014-0603/14/2014
Amortization (2nd def.)SupersededAccounting Standards Update No. 2014-0603/14/2014
Assumptions (1st def.)AddedAccounting Standards Update No. 2014-0603/14/2014
Assumptions (2nd def.)SupersededAccounting Standards Update No. 2014-0603/14/2014
Attribution (1st def.)AddedAccounting Standards Update No. 2014-0603/14/2014
Attribution (2nd def.)SupersededAccounting Standards Update No. 2014-0603/14/2014
Benefit ApproachSupersededAccounting Standards Update No. 2017-0703/10/2017
Benefit ApproachAmendedAccounting Standards Update No. 2014-0603/14/2014
BenefitsAmendedAccounting Standards Update No. 2016-1912/14/2016
Benefits (2nd def.)SupersededAccounting Standards Update No. 2014-0603/14/2014
Benefits (3rd def.)AddedAccounting Standards Update No. 2014-0603/14/2014
Cash Balance PlanSupersededAccounting Standards Update No. 2020-1010/29/2020
Contributory PlanSupersededAccounting Standards Update No. 2017-0703/10/2017
Contributory Plan (2nd def.)AddedAccounting Standards Update No. 2014-0603/14/2014
Contributory Plan (3rd def.)SupersededAccounting Standards Update No. 2014-0603/14/2014
Cost Approach (2nd def.)SupersededAccounting Standards Update No. 2014-0603/14/2014
Cost-Compensation ApproachSupersededAccounting Standards Update No. 2017-0703/10/2017
Defined Benefit Pension Plan (2nd def.)SupersededAccounting Standards Update No. 2014-0603/14/2014
Defined Benefit PlanAddedAccounting Standards Update No. 2014-0603/14/2014
Defined Contribution PlanAmendedAccounting Standards Update No. 2014-0603/14/2014
Discount RateAmendedAccounting Standards Update No. 2014-0603/14/2014
Expected Long-Term Rate of Return on Plan Assets (1st def.)AddedAccounting Standards Update No. 2014-0603/14/2014
Expected Long-Term Rate of Return on Plan Assets (2nd def.)SupersededAccounting Standards Update No. 2014-0603/14/2014
Expected Return on Plan Assets (1st def.)AddedAccounting Standards Update No. 2014-0603/14/2014
Expected Return on Plan Assets (2nd def.)SupersededAccounting Standards Update No. 2014-0603/14/2014
Funding MethodSupersededAccounting Standards Update No. 2017-0703/10/2017
Funding PolicySupersededAccounting Standards Update No. 2017-0703/10/2017
Funding Policy (2nd def.)SupersededAccounting Standards Update No. 2014-0603/14/2014
Funding Policy (3rd def.)AddedAccounting Standards Update No. 2014-0603/14/2014
Gain or Loss (1st def.)AddedAccounting Standards Update No. 2014-0603/14/2014
Gain or Loss (2nd def.)SupersededAccounting Standards Update No. 2014-0603/14/2014
Implicit Approach to AssumptionsSupersededAccounting Standards Update No. 2017-0703/10/2017
LossAmendedAccounting Standards Update No. 2014-0603/14/2014
Multiple-Employer Plan(1st def.)AddedAccounting Standards Update No. 2014-0603/14/2014
Multiple-Employer Plan (2nd def.)SupersededAccounting Standards Update No. 2014-0603/14/2014
Net Periodic Pension CostAmendedAccounting Standards Update No. 2017-0703/10/2017
Participant (2nd def.)AmendedAccounting Standards Update No. 2014-0603/14/2014
Participating InsuranceAddedAccounting Standards Update No. 2016-1912/14/2016
Participation Right (1st def.)SupersededAccounting Standards Update No. 2016-1912/14/2016
Participation Right (2nd def.)AddedAccounting Standards Update No. 2016-1912/14/2016
Pension FundAddedAccounting Standards Update No. 2014-0603/14/2014
Plan Amendment (1st def.)AddedAccounting Standards Update No. 2014-0603/14/2014
Plan Amendment (2nd def.)SupersededAccounting Standards Update No. 2014-0603/14/2014
Plan Assets Available for BenefitsSupersededAccounting Standards Update No. 2017-0703/10/2017
Plan Termination (1st def.)AddedAccounting Standards Update No. 2014-0603/14/2014
Plan Termination (2nd def.)SupersededAccounting Standards Update No. 2014-0603/14/2014
Prior Service Cost (2nd def.)AmendedAccounting Standards Update No. 2014-0603/14/2014
Single-Employer Plan (1st def.)AddedAccounting Standards Update No. 2014-0603/14/2014
Single-Employer Plan (2nd def.)SupersededAccounting Standards Update No. 2014-0603/14/2014
Sponsor (2nd def.)SupersededAccounting Standards Update No. 2017-0703/10/2017
Unallocated ContractSupersededAccounting Standards Update No. 2017-0703/10/2017
715-30-05-1AmendedAccounting Standards Update No. 2014-0603/14/2014
715-30-05-2AmendedAccounting Standards Update No. 2017-0703/10/2017
715-30-05-3AmendedAccounting Standards Update No. 2014-0603/14/2014
715-30-05-4AmendedAccounting Standards Update No. 2017-0703/10/2017
715-30-05-5SupersededAccounting Standards Update No. 2017-0703/10/2017
715-30-05-6AmendedAccounting Standards Update No. 2017-0703/10/2017
715-30-05-7SupersededAccounting Standards Update No. 2017-0703/10/2017
715-30-05-8SupersededAccounting Standards Update No. 2017-0703/10/2017
715-30-05-8AmendedAccounting Standards Update No. 2014-0603/14/2014
715-30-05-9AmendedAccounting Standards Update No. 2017-0703/10/2017
715-30-05-9AmendedAccounting Standards Update No. 2014-0603/14/2014
715-30-05-10SupersededAccounting Standards Update No. 2017-0703/10/2017
715-30-05-11SupersededAccounting Standards Update No. 2017-0703/10/2017
715-30-15-3AmendedAccounting Standards Update No. 2020-1010/29/2020
715-30-15-3AmendedAccounting Standards Update No. 2014-0603/14/2014
715-30-15-4AAddedAccounting Standards Update No. 2012-0410/01/2012
715-30-25-6AmendedAccounting Standards Update No. 2014-0603/14/2014
715-30-25-7AmendedAccounting Standards Update No. 2016-1912/14/2016
715-30-35-1AAmendedAccounting Standards Update No. 2014-0603/14/2014
715-30-35-4AmendedAccounting Standards Update No. 2014-0603/14/2014
715-30-35-7AmendedAccounting Standards Update No. 2014-0603/14/2014
715-30-35-7AAddedAccounting Standards Update No. 2017-0703/10/2017
715-30-35-10AmendedAccounting Standards Update No. 2014-0603/14/2014
715-30-35-18AmendedAccounting Standards Update No. 2014-0603/14/2014
715-30-35-21AmendedAccounting Standards Update No. 2014-0603/14/2014
715-30-35-22AmendedAccounting Standards Update No. 2014-0603/14/2014
715-30-35-42AmendedAccounting Standards Update No. 2014-0603/14/2014
715-30-35-44AmendedAccounting Standards Update No. 2012-0410/01/2012
715-30-35-47AmendedAccounting Standards Update No. 2014-0603/14/2014
715-30-35-53AmendedAccounting Standards Update No. 2016-1912/14/2016
715-30-35-59AmendedAccounting Standards Update No. 2016-1912/14/2016
715-30-35-63AAddedAccounting Standards Update No. 2015-0404/15/2015
715-30-35-63BAddedAccounting Standards Update No. 2015-0404/15/2015
715-30-35-66AAddedAccounting Standards Update No. 2015-0404/15/2015
715-30-35-66BAddedAccounting Standards Update No. 2015-0404/15/2015
715-30-35-70AmendedAccounting Standards Update No. 2014-0603/14/2014
715-30-35-71SupersededAccounting Standards Update No. 2020-1010/29/2020
715-30-35-72SupersededAccounting Standards Update No. 2020-1010/29/2020
715-30-35-75AmendedAccounting Standards Update No. 2014-0603/14/2014
715-30-35-76AmendedAccounting Standards Update No. 2014-0603/14/2014
715-30-35-79AmendedAccounting Standards Update No. 2016-1912/14/2016
715-30-35-79AmendedAccounting Standards Update No. 2014-0603/14/2014
715-30-35-88AmendedAccounting Standards Update No. 2016-1912/14/2016
715-30-35-90AmendedAccounting Standards Update No. 2014-0603/14/2014
715-30-35-91AmendedAccounting Standards Update No. 2014-0603/14/2014
715-30-45-1AmendedAccounting Standards Update No. 2014-0603/14/2014
715-30-55-3 through 55-7
AmendedAccounting Standards Update No. 2014-0603/14/2014
715-30-55-18AmendedAccounting Standards Update No. 2014-0603/14/2014
715-30-55-40AmendedAccounting Standards Update No. 2014-0603/14/2014
715-30-55-46AmendedAccounting Standards Update No. 2014-0603/14/2014
715-30-55-62AmendedAccounting Standards Update No. 2014-0603/14/2014
715-30-55-63AmendedAccounting Standards Update No. 2015-1006/12/2015
715-30-55-63AmendedAccounting Standards Update No. 2011-0909/21/2011
715-30-55-64AmendedAccounting Standards Update No. 2011-0909/21/2011
715-30-55-127AAddedAccounting Standards Update No. 2020-1010/29/2020
715-30-55-128AmendedAccounting Standards Update No. 2014-0603/14/2014
715-30-55-132AmendedAccounting Standards Update No. 2014-0603/14/2014
715-30-55-133AmendedAccounting Standards Update No. 2014-0603/14/2014
715-30-55-153AmendedAccounting Standards Update No. 2016-1912/14/2016
715-30-55-160AmendedAccounting Standards Update No. 2014-0603/14/2014
715-30-55-176AmendedAccounting Standards Update No. 2014-0603/14/2014
715-30-55-188AmendedAccounting Standards Update No. 2014-0603/14/2014
715-30-55-190AmendedMaintenance Update 2016-11 (PDF)06/27/2016
715-30-55-191SupersededAccounting Standards Update No. 2015-0101/09/2015
715-30-55-192SupersededAccounting Standards Update No. 2015-0101/09/2015
715-30-55-195AmendedAccounting Standards Update No. 2014-0804/10/2014
715-30-55-196AmendedAccounting Standards Update No. 2014-0804/10/2014
715-30-55-242AmendedAccounting Standards Update No. 2014-0804/10/2014
715-30-55-248AmendedAccounting Standards Update No. 2014-0804/10/2014
715-30-60-1AmendedAccounting Standards Update No. 2014-0603/14/2014
715-30-60-2AmendedAccounting Standards Update No. 2017-0703/10/2017
715-30-60-8AmendedAccounting Standards Update No. 2014-0603/14/2014
Source downloaded (UTC): 2026-09-10T00:59:53.143Z to 2026-09-10T00:59:53.143Z Record version: sha256:685d8efa06b5e4fcf8a608307118079635d2cea242d1854725ebae5d292dc0f7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 715-30-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/715/30/#05-overview-and-background) SEC content: no ##### [715-30-05-1](https://asc.understandingaccounting.org/asc/715/30/#715-30-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:59:53.143Z to 2026-09-10T00:59:53.143Z Record version: sha256:1c1c96bb5d2480ce1d2e832e01d7a4ade08872ce54585b36e48cf7f227fa181f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance on defined benefit pension accounting for an employer that offers [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 its employees. This Subtopic focuses on an employer's accounting for a single-employer [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.)"). ##### [715-30-05-2](https://asc.understandingaccounting.org/asc/715/30/#715-30-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:59:53.143Z to 2026-09-10T00:59:53.143Z Record version: sha256:1cdbb09b62dafb87f7c28ac827d89f538ea7505347f7619419ef6389604623c0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Many of the provisions in this Subtopic are the same as or are similar to the provisions of Subtopic 715-60. Consequently, the guidance provided in that Subtopic may be useful in understanding and implementing many of the provisions of this Subtopic. However, there are differences between the specific requirements of the two Subtopics, and therefore the specific guidance in one Subtopic should not be used to override guidance of the other. ##### [715-30-05-3](https://asc.understandingaccounting.org/asc/715/30/#715-30-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:59:53.143Z to 2026-09-10T00:59:53.143Z Record version: sha256:91d5b224bbd00eaa4dd38700db1b0cde62e3c9f252527938520041c3a75da8cd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic is presented in the following two Subsections: 1. a General 2. b Settlements, Curtailments, and Certain Termination [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."). ##### [715-30-05-4](https://asc.understandingaccounting.org/asc/715/30/#715-30-05-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:59:53.143Z to 2026-09-10T00:59:53.143Z Record version: sha256:601000335a224c835ccad7a00537ed9bc3f838b914cab4d7188afea4929d27a7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The General Subsections address the fundamentals of defined benefit pension accounting. A pension benefit is part of the compensation paid to an employee for services. Generally, the amount of benefit to be paid depends on a number of future events that are incorporated in the [plan's benefit formula](https://asc.understandingaccounting.org/glossary/p/#pension-benefit-formula "The basis for determining payments to which participants may be entitled under a pension plan. Pension benefit formulas usually refer to the employee's service or compensation or both. Sometimes referred to as a plan's benefit formula or benefit formula."), often including how long the employee and any survivors live, how many years of [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.") the employee renders, and the employee's compensation in the years immediately before retirement or termination.Conceptually, compensation cost should be recognized in the period in which the employee renders services. Although the complexity and uncertainty of the pension arrangement may preclude complete achievement of that goal, a fundamental objective of this Subtopic is to approximate more closely the recognition of the compensation cost of an employee's pension benefits over that employee's service period. ##### [715-30-05-5](https://asc.understandingaccounting.org/asc/715/30/#715-30-05-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:59:53.143Z to 2026-09-10T00:59:53.143Z Record version: sha256:014c5568d73c66437b15f79b38850f3b41fa3ef916ff434fe4403a14359aa936 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2017-07](https://asc.understandingaccounting.org/updates/asu-2017-07/). ##### [715-30-05-6](https://asc.understandingaccounting.org/asc/715/30/#715-30-05-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:59:53.143Z to 2026-09-10T00:59:53.143Z Record version: sha256:b2c603f2e037ac723c18b9ead86e8419fa99b98ad5dbf417d97813e73676cd1e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The core elements of pension accounting include measurement of net periodic pension cost and benefit obligations (see paragraphs [715-30-35-1A through 35-41](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-1A) ), assumptions (see paragraphs [715-30-35-42 through 35-49](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-42) ), and measurement of plan assets (see paragraphs [715-30-35-50 through 35-52](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-50) ). ##### [715-30-05-7](https://asc.understandingaccounting.org/asc/715/30/#715-30-05-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:59:53.143Z to 2026-09-10T00:59:53.143Z Record version: sha256:49d1fa29aa7987bee8388070d913daad6b1dc6d8fea0ba25ce5d908d4959906c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2017-07](https://asc.understandingaccounting.org/updates/asu-2017-07/). ##### [715-30-05-8](https://asc.understandingaccounting.org/asc/715/30/#715-30-05-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:59:53.143Z to 2026-09-10T00:59:53.143Z Record version: sha256:110900bf87495e3435c80a67433f08d66d6ff89fc95732a650076b83c81415e2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2017-07](https://asc.understandingaccounting.org/updates/asu-2017-07/). ### Settlements, Curtailments, and Certain Termination Benefits ##### [715-30-05-9](https://asc.understandingaccounting.org/asc/715/30/#715-30-05-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:59:53.143Z to 2026-09-10T00:59:53.143Z Record version: sha256:98d8062cebc0ec2fb65f9d49d91adbb41b03963b05d96563103843c2b2410984 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Settlements, Curtailments, and Certain Termination Benefits Subsections establish standards for an employer's accounting for [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 defined benefit pension obligations, for [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.") of 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.)"), and for certain termination benefits, and define the events that require adjustments to assets and liabilities and that require certain amounts previously recognized in accumulated other comprehensive income to be recognized in earnings. The Settlements, Curtailments, and Certain Termination Benefits Subsections provide guidance that results in the net [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.") and [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."), which were previously recognized in accumulated other comprehensive income, being recognized in income in the period when specific conditions are met. 1. a [Subparagraph superseded by Accounting Standards Update No. 2017-07](https://asc.understandingaccounting.org/updates/asu-2017-07/). 2. b [Subparagraph superseded by Accounting Standards Update No. 2017-07](https://asc.understandingaccounting.org/updates/asu-2017-07/). 3. c [Subparagraph superseded by Accounting Standards Update No. 2017-07](https://asc.understandingaccounting.org/updates/asu-2017-07/). 4. d [Subparagraph superseded by Accounting Standards Update No. 2017-07](https://asc.understandingaccounting.org/updates/asu-2017-07/). 5. e [Subparagraph superseded by Accounting Standards Update No. 2017-07](https://asc.understandingaccounting.org/updates/asu-2017-07/). 6. f [Subparagraph superseded by Accounting Standards Update No. 2017-07](https://asc.understandingaccounting.org/updates/asu-2017-07/). ##### [715-30-05-10](https://asc.understandingaccounting.org/asc/715/30/#715-30-05-10) Pending content: no Source downloaded (UTC): 2026-09-10T00:59:53.143Z to 2026-09-10T00:59:53.143Z Record version: sha256:e464539d2935d30029df2ddc111522ad3088ce91423c34d9255432a66d93de49 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2017-07](https://asc.understandingaccounting.org/updates/asu-2017-07/). ##### [715-30-05-11](https://asc.understandingaccounting.org/asc/715/30/#715-30-05-11) Pending content: no Source downloaded (UTC): 2026-09-10T00:59:53.143Z to 2026-09-10T00:59:53.143Z Record version: sha256:e79fbaea9d3d5c5d1f73ac5125ecf409a6c2ca3898e6e6713f175a6147d61e0a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2017-07](https://asc.understandingaccounting.org/updates/asu-2017-07/). Source downloaded (UTC): 2026-09-10T00:59:56.604Z to 2026-09-10T00:59:56.604Z Record version: sha256:da6f0070ee8e80dbeebe3fd972787ae00dec48eaf392ed8d2e74346ba489b923 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 715-30-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/715/30/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [715-30-15-1](https://asc.understandingaccounting.org/asc/715/30/#715-30-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:59:56.604Z to 2026-09-10T00:59:56.604Z Record version: sha256:8be4377d85c30e44dc7f20605b11a7fb5c8e368cba3f413bf8e4373f5df70d59 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 715-10-15, with specific qualifications and exceptions noted below. ##### [715-30-15-2](https://asc.understandingaccounting.org/asc/715/30/#715-30-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:59:56.604Z to 2026-09-10T00:59:56.604Z Record version: sha256:b1ebee5c79c7fa7648f72d2eb7a94d1ff81ff8a8b92ebbd8d56c992447b11d6b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The General Subsection of this Section establishes the pervasive scope for this Subtopic, with specific exceptions noted in the other Subsections of this Section. #### Transactions ##### [715-30-15-3](https://asc.understandingaccounting.org/asc/715/30/#715-30-15-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:59:56.604Z to 2026-09-10T00:59:56.604Z Record version: sha256:17237bc1d05e5976558c3c988ba9d5e1ce65b35f61521616128227544b295ffd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic applies to [defined benefit pension plans](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.)"), including but not limited to the following types of arrangements: 1. a Cash balance plans 2. b [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.") provided in the event of a voluntary or involuntary severance of employment (also called [termination indemnities](https://asc.understandingaccounting.org/glossary/t/#termination-indemnities "Arrangements, usually or more frequently encountered outside the United States, that are also referred to as termination allowances or severance indemnities. Termination indemnities are amounts payable to eligible employees upon termination of employment. Eligibility may be determined by law, by local custom, by the employer's policy, or by contract with the employer. Plans may or may not be in writing. Termination indemnities are normally, but not exclusively, associated with preretirement severance of employment. They are usually payable as a lump sum, or occasionally in a few payments over a short period of time.")) if such an arrangement is in substance a pension plan (for example, if the benefits are paid for virtually all terminations). ##### [715-30-15-4](https://asc.understandingaccounting.org/asc/715/30/#715-30-15-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:59:56.604Z to 2026-09-10T00:59:56.604Z Record version: sha256:6978f39dc23280884c6517a191f461f5e45ff1816d3d87a331e7ce116c29c1ff Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic does not apply to the following types of benefit plans or arrangements: 1. a Life insurance benefits provided outside a pension plan or other postretirement health and welfare benefits 2. b Health care benefits provided through a pension plan. The accounting for those benefits is set forth in Subtopic 715-60. #### Plans with Characteristics of both a Defined Contribution and a Defined Benefit Plan ##### [715-30-15-4A](https://asc.understandingaccounting.org/asc/715/30/#715-30-15-4A) Pending content: no Source downloaded (UTC): 2026-09-10T00:59:56.604Z to 2026-09-10T00:59:56.604Z Record version: sha256:e7b4dcc99cbac411615fda2af62ce189d634612853096b881820ee319a054baa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [715-70-15-2](https://asc.understandingaccounting.org/asc/715/70/#715-70-15-2) for guidance for plans with characteristics of both a defined contribution and a defined benefit plan. ### Settlements, Curtailments, and Certain Termination Benefits #### Overall Guidance ##### [715-30-15-5](https://asc.understandingaccounting.org/asc/715/30/#715-30-15-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:59:56.604Z to 2026-09-10T00:59:56.604Z Record version: sha256:ee042583890dd6680d1afde2c2aa2fd3a32926d6aa0ab99a0eb22445367e5212 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Settlements, Curtailments, and Certain Termination Benefits Subsections follow the same Scope and Scope Exceptions as outlined in the General Subsection of this Subtopic, see paragraph [715-30-15-1](https://asc.understandingaccounting.org/asc/715/30/#715-30-15-1), with specific exceptions noted below. #### Transactions ##### [715-30-15-6](https://asc.understandingaccounting.org/asc/715/30/#715-30-15-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:59:56.604Z to 2026-09-10T00:59:56.604Z Record version: sha256:f3fb99403ec1e3f22ae3e7913429c67e524ea140cb99b9558298a5a757e3a9ff Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Settlements, Curtailments, and Certain Termination Benefits Subsections applies to the following transactions and activities: 1. a If all or part of the plan's pension benefit obligation is settled or the plan is curtailed: 1. 1 Plan settlements. Examples of transactions that constitute 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.") include making lump-sum cash payments to plan participants in exchange for their rights to receive specified [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.") and purchasing nonparticipating annuity contracts to cover [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."). 2. 2 [Plan 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."), which include: 1. i Termination of employees' services earlier than expected, which may or may not involve closing a facility or discontinuing a component of an entity. 2. ii Termination or suspension of a plan so that employees do not earn additional defined benefits for future services. In the latter situation, 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.") may be counted toward vesting of benefits accumulated based on past service. 2. b Termination benefits provided under an ongoing defined benefit pension arrangement. 3. c Other termination benefits not otherwise addressed in the following: 1. 1 Topic 420 2. 2 Topic 710 3. 3 Topic 712 4. 4 Subtopic 715-60. ##### [715-30-15-7](https://asc.understandingaccounting.org/asc/715/30/#715-30-15-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:59:56.604Z to 2026-09-10T00:59:56.604Z Record version: sha256:5434860851403ae288dfccfad4e6e71fc4e8b9455112126afac6b99a00b53bb6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Settlements, Curtailments, and Certain Termination Benefits Subsections does not apply to the following transactions and activities: 1. a An employer's withdrawal from a multiemployer pension plan 2. b Other termination benefits addressed in the following: 1. 1 Topic 420 2. 2 Topic 710 3. 3 Topic 712 4. 4 Subtopic 715-60. Source downloaded (UTC): 2026-09-10T01:00:01.670Z to 2026-09-10T01:00:01.670Z Record version: sha256:df39fddb8cb3f28a453711988cc921368ee2be121d7d7dd1c366d90629ce4704 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 715-30-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/715/30/#25-recognition) SEC content: no #### Recognition of Liabilities and Assets ##### [715-30-25-1](https://asc.understandingaccounting.org/asc/715/30/#715-30-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:01.670Z to 2026-09-10T01:00:01.670Z Record version: sha256:d370f34a03554f600fc9de7a10a2d67f68520dddc9e3eb711fc0d74c21db596f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If 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).") exceeds the fair value of [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."), the employer shall recognize in its statement of financial position a liability that equals the [unfunded projected benefit obligation](https://asc.understandingaccounting.org/glossary/u/#unfunded-projected-benefit-obligation "The excess of the projected benefit obligation over plan assets."). If the fair value of plan assets exceeds the projected benefit obligation, the employer shall recognize in its statement of financial position an asset that equals the overfunded projected benefit obligation. ##### [715-30-25-2](https://asc.understandingaccounting.org/asc/715/30/#715-30-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:01.670Z to 2026-09-10T01:00:01.670Z Record version: sha256:c8e821c36e6786c47c85d711f2f7a6c999a05fe64e6be8b952bc90a1e413a28a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The employer shall aggregate the statuses of all overfunded plans and recognize that amount as an asset in its statement of financial position. It also shall aggregate the statuses of all underfunded plans and recognize that amount as a liability in its statement of financial position. ##### [715-30-25-3](https://asc.understandingaccounting.org/asc/715/30/#715-30-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:01.670Z to 2026-09-10T01:00:01.670Z Record version: sha256:e726ca858e5e72eb27447e28bdf0c3379c2afc83adc92e5ac8db3748b03965b9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The asset or liability that is recognized pursuant to paragraph [715-30-25-1](https://asc.understandingaccounting.org/asc/715/30/#715-30-25-1) may result in a temporary difference, as defined in Subtopic 740-10. The deferred tax effects of any temporary differences shall be recognized in income tax expense or benefit for the year and shall be allocated to various financial statement components, including other comprehensive income, pursuant to Section 740-20-45. ##### [715-30-25-4](https://asc.understandingaccounting.org/asc/715/30/#715-30-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:01.670Z to 2026-09-10T01:00:01.670Z Record version: sha256:099b6f9fd9b0ed0bbe024018572b1afab275b43ddd4864caf9f26e72a3821bac Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a new determination of the funded status of a plan to be recognized as an asset or a liability in the employer's statement of financial position is made (see paragraphs [715-30-35-62 through 35-69](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-62) ), or when net gains or losses, prior [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.") costs or credits, or the net transition asset or obligation existing at the date of initial application of this Subtopic are amortized as 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."), the related balances for those net gains or losses, prior service costs or credits, and transition asset or obligation in accumulated other comprehensive income shall be adjusted as necessary and reported in other comprehensive income. ##### [715-30-25-5](https://asc.understandingaccounting.org/asc/715/30/#715-30-25-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:01.670Z to 2026-09-10T01:00:01.670Z Record version: sha256:932dc47e4cda54c86476e3dd73791aaaafd129e13cf1c1031cf22e2ef678848e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Sometimes, an entity remeasures both plan assets and benefit obligations during the fiscal year. Paragraph [715-30-35-66](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-66) provides an example of some events that may require a remeasurement. Upon remeasurement, a business 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. ##### [715-30-25-6](https://asc.understandingaccounting.org/asc/715/30/#715-30-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:01.670Z to 2026-09-10T01:00:01.670Z Record version: sha256:0c9f82d856fd1f3282a416d191b0d774342ba92fee26bd04bce41ba115e7bca0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An employer that sponsors two or more separate [defined benefit pension plans](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.)") shall determine net periodic pension cost, liabilities, and assets by separately applying the provisions of this Subtopic to each plan. In particular, unless an employer clearly has a right to use the assets of one plan to pay [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.") of another, a liability required to be recognized pursuant to paragraph [715-30-25-1](https://asc.understandingaccounting.org/asc/715/30/#715-30-25-1) for one plan shall not be reduced or eliminated because the employer has recognized an asset for another plan that has assets in excess of its projected benefit obligation. #### Participation Rights ##### [715-30-25-7](https://asc.understandingaccounting.org/asc/715/30/#715-30-25-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:01.670Z to 2026-09-10T01:00:01.670Z Record version: sha256:76c92709c01bf3db7540adf2d7dd4435745c236a42d99f1cb4ef99c8c22a12c6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If an [annuity contract](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.") with a [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.") is purchased, the cost of the participation right shall be recognized at the date of purchase as an asset. 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. ### Settlements, Curtailments, and Certain Termination Benefits #### Certain Termination Benefits ##### [715-30-25-8](https://asc.understandingaccounting.org/asc/715/30/#715-30-25-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:01.670Z to 2026-09-10T01:00:01.670Z Record version: sha256:f858cbf775645111e17349abf12adb143bfd987ec202c06063a356c5e1e3ca3b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subsection addresses the accounting for [termination benefits](https://asc.understandingaccounting.org/glossary/t/#termination-benefits "Benefits provided by an employer to employees in connection with their termination of employment. They may be either special termination benefits offered only for a short period of time or contractual benefits required by the terms of a plan only if a specified event, such as a plant closing, occurs.") that are not otherwise addressed in the Subtopic and Topics indicated in paragraph [715-30-15-6c](https://asc.understandingaccounting.org/asc/715/30/#15-scope-and-scope-exceptions). ##### [715-30-25-9](https://asc.understandingaccounting.org/asc/715/30/#715-30-25-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:01.670Z to 2026-09-10T01:00:01.670Z Record version: sha256:a07b69af37f8d9d51d57a249ce5b5fe1096ce2d1f82f54f8588ea42595c99586 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An employer may provide benefits to employees in connection with their termination of employment. Those benefits may be either special termination benefits offered only for a short period of time or contractual termination benefits required by the terms of a plan only if a specified event, such as a plant closing, causes employees' services to be terminated involuntarily. ##### [715-30-25-10](https://asc.understandingaccounting.org/asc/715/30/#715-30-25-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:01.670Z to 2026-09-10T01:00:01.670Z Record version: sha256:b179742c2f22bf1dec5cac3635be3c4df0dc3e67b2bbcb558d84b35e0355030e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Termination benefits may take various forms including lump-sum payments, periodic future payments, or both. They may be paid directly from an employer's assets, an existing pension plan, a new employee benefit plan, or a combination of those means. An employer that offers special termination benefits to employees shall recognize a liability and a [loss](https://asc.understandingaccounting.org/glossary/l/#loss "See Gain or Loss.") when the employees accept the offer and the amount can be reasonably estimated. An employer that provides contractual termination benefits shall recognize a liability and a loss when it is probable that employees will be entitled to benefits and the amount can be reasonably estimated. ##### [715-30-25-11](https://asc.understandingaccounting.org/asc/715/30/#715-30-25-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:01.670Z to 2026-09-10T01:00:01.670Z Record version: sha256:f9ead498460dd3fa08cc0b4a7eb16aca29b36e0d869613c77cf3b7063aaa4c95 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The cost of termination benefits within the scope of this Subsection recognized as a liability and a loss shall include the amount of any lump-sum payments and the present value of any expected future payments. The liability and the loss from the acceptance of the offer of special termination benefits is the difference as of the date the employees accept the offer between 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 the respective employees' accumulated [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.") without considering the special termination benefits and the actuarial present value of their accumulated pension benefits considering the special termination benefits. ##### [715-30-25-12](https://asc.understandingaccounting.org/asc/715/30/#715-30-25-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:01.670Z to 2026-09-10T01:00:01.670Z Record version: sha256:139a012bbb12dcfd26db4eb693ee5d017fec22e3bacce40eafae604dedbe4a9e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Example 6 (paragraph [715-30-55-226](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-226)) for an illustration of the determination of the liability and the losses from employees' acceptance of an offer of special termination benefits. ##### [715-30-25-13](https://asc.understandingaccounting.org/asc/715/30/#715-30-25-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:01.670Z to 2026-09-10T01:00:01.670Z Record version: sha256:ad88f11ae54ca24dadab3dd8b0ace241ff4c5442283568674295c782d33fc062 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A situation involving termination benefits may also involve a [curtailment](https://asc.understandingaccounting.org/glossary/c/#curtailment "See Plan Curtailment.") to be accounted for under paragraphs [715-30-35-92 through 35-95](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-92) . 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. Source downloaded (UTC): 2026-09-10T01:00:07.182Z to 2026-09-10T01:00:07.182Z Record version: sha256:99e5cab3cd42f86168f518261beedd00ef7559369241320ca4ca4e8505b0392d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 715-30-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/715/30/#45-other-presentation-matters) SEC content: no ##### [715-30-45-1](https://asc.understandingaccounting.org/asc/715/30/#715-30-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:07.182Z to 2026-09-10T01:00:07.182Z Record version: sha256:45e492bfd0613468b1ea5e2cbe5040ca529d6bcd181eb99d19ad4e138ec9ffe0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [715-30-25-4](https://asc.understandingaccounting.org/asc/715/30/#715-30-25-4) for guidance on reporting changes in a plan's funded status and the effect of certain [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.") 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.") in other comprehensive income. Source downloaded (UTC): 2026-09-10T01:00:09.560Z to 2026-09-10T01:00:09.560Z Record version: sha256:040081ac80b363b281e831c04a52dc0a0b41d25702695f259b649e1d4b66c54a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 715-30-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/715/30/#50-disclosure) SEC content: no ##### [715-30-50-1](https://asc.understandingaccounting.org/asc/715/30/#715-30-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:09.560Z to 2026-09-10T01:00:09.560Z Record version: sha256:020ca6cc6381f328942306d41174e85ee5ee7fd88639fb5937becaaa7c8a08f2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Section 715-20-50 for disclosure requirements applicable to matters in the scope of this Subtopic. ### Settlements, Curtailments, and Certain Termination Benefits ##### [715-30-50-2](https://asc.understandingaccounting.org/asc/715/30/#715-30-50-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:09.560Z to 2026-09-10T01:00:09.560Z Record version: sha256:65956c059857022c78824a578a4bba99fa4654269b950140b896947657cd3609 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Section 715-20-50 for disclosure requirements applicable to matters in the scope of this Subtopic. Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:cac4fc1378e8db87314f8a80ea70960921d3741a26f2f54de4578355d2ad9c73 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 715-30-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/715/30/#55-implementation-guidance-and-illustrations) SEC content: no ##### [715-30-55-1](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:3e2f2d2c1678e8c5a4b5d694025605aa87a09b978bbcc7848964682f0b13e9cc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subsection is an integral part of the requirements of this Subtopic. This Subsection provides additional guidance and illustrations that address the application of accounting requirements to specific aspects of accounting for matters related to defined benefit pension plans. The guidance and illustrations that follow may be based on provisions of law that are subject to change. These assumptions about the law are for illustrative purposes only. #### Implementation Guidance ##### [715-30-55-2](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:37fd3e3f63319ed8af75bcd74a9b8e191cef38f3285c7a84e110664ae1f689a2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This implementation guidance is organized into the following categories: 1. a Net periodic pension cost 2. b Attribution 3. c Substantive commitment 4. d Assumptions 5. e Selection of discount rates 6. f Plan assets 7. g Insurance contracts 8. h Amounts included in accumulated other comprehensive income 9. i Timing of measurements 10. j Multiemployer, multiple-employer, and single-employer plans 11. k Pension arrangements outside the United States 12. l Combining and dividing plans. ##### [715-30-55-3](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:82a5e7213939ea28ff8d39a5c19ac2fbedc5020bba060a3531afa726437e26ee Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [715-30-35-4](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-4) provides that [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.") is an aggregation of various pension cost components, some of which are expenses or losses (which increase net periodic pension cost) and some of which are revenues or gains (which decrease net periodic pension cost). It is possible for the revenue or gain components to exceed the expense or [loss](https://asc.understandingaccounting.org/glossary/l/#loss "See Gain or Loss.") components, resulting in net periodic pension income. For example, a pension plan may have an [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.") or [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 a transition asset remaining in accumulated other comprehensive income that exceeds the other net periodic pension cost components. ##### [715-30-55-4](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:599b1b43b3393f2bfdbe837a60fc0a317458958752f5fbe0874e099c22fa1fac Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An employer sponsoring a pension plan that is overfunded may have net periodic pension cost that is a net credit (that is, net periodic pension income) and the employer may make no contribution to the pension plan because it cannot currently deduct that amount for tax purposes. In this situation, the difference between net periodic pension income and the tax-deductible amount is a temporary difference as discussed in paragraphs [740-10-25-18 through 25-20](https://asc.understandingaccounting.org/asc/740/10/#740-10-25-18) . The difference between net periodic pension income and the tax-deductible amount represents the origination or reversal of a portion of the overall temporary difference related to a pension plan for which deferred taxes should be provided. Ultimately, the employer's cost of providing [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 employees equals the net amount funded, which is equal to the total [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.") paid less earnings on plan assets. Thus, cumulative pension cost for accounting purposes will equal the cumulative amount recognized for tax purposes. ##### [715-30-55-5](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:b7d1e11924143591e0a099697433c444f544101c306dc6f834e81dccea976771 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The overall temporary difference discussed in the preceding paragraph will reverse in one of two ways. First, at some future time the pension plan may not be so overfunded because of poor investment performance or because of increases in the obligation due to a decline in interest rates, additional pension benefits earned for future years of [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."), or amendments to the pension plan that increase pension benefits. In this case, net periodic pension cost for future years would eventually exceed amounts funded in those years. Second, if the pension plan remains overfunded and continually generates investment returns in excess of increases in the pension obligation, the employer may terminate the pension plan to recapture excess assets. In this case, the gain for accounting purposes from the pension [plan termination](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.") would be less than the taxable amount resulting from that event. Although the reversal of the temporary difference may be far in the future and may be somewhat under the employer's control, there is a temporary difference for which deferred taxes should be provided. ##### [715-30-55-6](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:a1faf77d70cf6790339821501d0c7bdfb23f724591a2d0da3a208b961cd57e67 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An employer may withdraw excess plan assets (cash) from a pension plan, not be required to settle a pension benefit obligation as part of an asset reversion transaction, and, as provided for in paragraph [715-30-55-145](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-145), no net [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.") included in accumulated other comprehensive income would be immediately recognized in earnings. However, the withdrawal of excess plan assets shall be recorded as a negative contribution. That is, the employer shall record a debit to cash and a credit to the net pension asset or liability, as appropriate. ##### [715-30-55-7](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:4f95d154add09742e91204d417c7a5711633b58ccb625bfd88148dec359e0d0d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following attribution-related implementation guidance illustrates the application of the guidance in paragraph [715-30-35-36](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-36) that establishes that pension benefits ordinarily shall be attributed to periods of employee service based on the [plan's benefit formula](https://asc.understandingaccounting.org/glossary/p/#plan-s-benefit-formula "See Pension Benefit Formula.") to the extent that the formula states or implies 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."). ##### [715-30-55-8](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:8f6544c09d4ce357f3bf6e189b803b1abdea4b287a87d3342d20b09f8a9a1c03 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Under the paragraph [715-30-35-36](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-36) guidance, if a pension plan's formula provides an annual pension benefit equal to 1 percent of each year's salary (that is, it does not base pension benefits for the current year on any future salary level), the projected unit credit method should be used to attribute the service cost component of net periodic pension cost over employees' service periods because a pension plan that describes the pension benefits earned as 1 percent of current pay for each year of service is the same as a pension plan that describes the pension benefits earned as 1 percent of total career pay. Both are, in effect, a career-average-pay pension plan. Because similar pension benefits could be provided by a final-pay pension plan that includes almost the entire service period (for example, service period minus the first year) in determining the average final pay on which pension benefits are based, the line between career-average-pay and final-pay pension plans would need to be an arbitrary one if the two types of formulas were to be treated differently. ##### [715-30-55-9](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:00e34a93ff8599c06173b47bdfe5758c78059b53ba19cf5bbd59d3591ce6bb68 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A career-average-pay pension plan may have a formula that provides pension benefits equal to 1 percent of each year's salary for that year's service with, for example, prospective (flat-benefit) plan amendments granted every 3 years as part of union negotiations (for example, a negotiated increase may provide that additional benefits of $360 per year are earned for each of the following 3 years of service). In such a plan, the projected unit credit method should not be used for both the career-average-pay and the flat-benefit portions of the pension benefits provided under the pension plan. Rather, the projected unit credit method should be used to attribute the career-average-pay portion of the pension benefits over employees' service periods, and the unit credit method should be used for the flat-benefit portion for the limited service period, which, in this example, is three years. ##### [715-30-55-10](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:644c0e2e5ea053d6f67bb8feb2f29a12b4c66c52139b6b8dc5430eb6f0bc34ff Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In a pension plan that provides a pension benefit of 1 percent of final pay for each year of service up to a maximum of 20 years of service with, for example, final pay frozen at the 20th year, the employer should not attribute the total projected benefits under the pension plan for an employee over the employee's expected service period even if that service period is anticipated to exceed the 20-year limitation. Although total projected benefits ordinarily should be attributed to years of service based on the pension plan's formula, paragraph [715-30-35-38](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-38) explains that some pension plans have formulas that attribute a disproportionate share of those pension benefits to later years of service and requires attribution of those pension benefits ratably over the service period (which would be faster than the pension plan formula). However, no basis exists for attribution of pension benefits to years of service more slowly than the pension plan's formula. In this example, the service cost component of net periodic pension cost for the employee should be zero after Year 20. However, interest cost should continue to accrue on 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)."). If the pension plan's formula in this example provided a pension benefit of 1 percent of final pay for each year of service up to a maximum of 20 years of service and final pay is not frozen at the 20th year, the result is the same except that gains or losses will occur after the 20-year period if experience is different from that assumed regarding the final level of compensation. ##### [715-30-55-11](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:96fa4a396e21d6dd919c74e23c90bc5150781494ded1ea81c38d10a5d33b33eb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A pension plan may have more than one formula with an employee's pension benefits determined based on the formula that provides the greatest pension benefit at the time the employee terminates or retires. For example, if the employee terminates in Year 10, the pension plan's [flat-benefit formula](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.") provides a greater pension benefit than does the pension plan's pay-related formula, while if the employee terminates in Year 11, the pension plan provides that same employee with a greater benefit under its pay-related formula than under its flat-benefit formula. In a pension plan that effectively has a formula that defines different benefits for different years of service, an attribution approach that does not assign the same amount of pension benefit to each year of an employee's service may be required. ##### [715-30-55-12](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:902c4e8999ec5b92fc812c3c1bfc5deae2c3ebd4086cbb9f722a8ac26fbd53b9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a pension plan has more than one formula, 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.") shall be based on the greatest of the pension benefits determined by applying each of the plan's formulas to service to date. The projected benefit obligation shall be determined based on the same formula until an allocation of incremental pension benefits for the remaining expected service period using another formula provides a greater pension benefit allocated to service in the current year. As indicated in the preceding paragraph, that may result in differing levels of benefits attributed to different years of an employee's service. ##### [715-30-55-13](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:db0a4bea2f843d7bf9a03beb936035bdec7873cb0ec7216499d1cb18b7fe634c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Example 3 (paragraph [715-30-55-108](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-108)) for an illustration of how an employer would determine the accumulated and projected benefit obligations for a pension plan that has more than one benefit formula. ##### [715-30-55-14](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-14) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:5990ea3445093576d3c42c17b2b62489442fb25345a80b388a10c3639995bd5f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An employer may sponsor both a qualified pension plan (for tax purposes) and an excess benefit plan (sometimes referred to as a top-hat pension plan) during an employee's service period and the employee may be expected to receive a pension benefit under the excess benefit pension plan (that is, the employee's pension benefit at retirement is expected to exceed the limitations imposed by the U.S. Internal Revenue Code). In this situation, the projected benefit obligation should be attributed to the qualified pension plan (for tax purposes) until it equals the assumed benefit limitations imposed by the U.S. Internal Revenue Code. See paragraph [715-30-55-21](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-21) for considerations of future changes in limitations. Any incremental projected benefits for subsequent years of service should then be attributed to the excess benefit pension plan. Until an employee's projected benefits for service already rendered reach the benefit limitations of the underlying qualified pension plan, the employee is not eligible for benefits under an excess benefit pension plan and no cost or obligation should be attributed to that pension plan. ##### [715-30-55-14A](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-14A) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:c353ae3228849ffd54229ac03fcf2fdb7b6d46945a51cb12cfc6707208712033 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In most circumstances involving excess benefit pension plans, the plan assets of a qualified pension plan (for tax purposes) are segregated and restricted to provide pension benefits only under that pension plan. Therefore, unless an employer clearly has a legal right to use the plan assets of the qualified pension plan to pay directly the pension benefits of the nonqualified pension plan (a right that generally does not exist), the determination of net periodic pension cost, including amortization periods and patterns for recognition in earnings of the cost of retroactive plan amendments and gains or losses should be on a plan-by-plan basis. Also, the disclosures required by paragraph [715-20-50-2](https://asc.understandingaccounting.org/asc/715/20/#715-20-50-2) may need to be made separately for each plan. ##### [715-30-55-14B](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-14B) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:1fe497f5a66ca3a78db25807999e545e1252108156772cf532ca57a1de81ac7a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The fact that an employer could fund less to the qualified pension plan and use those withheld funds to pay the benefits of the nonqualified pension plan or engage in an asset reversion transaction of the qualified pension plan and use those withdrawn funds to pay the pension benefits of the nonqualified pension plan does not, in itself, allow the pension plans to be reported as a single pension plan. An additional reason that excess benefit pension plans should be viewed as separate pension plans is that sometimes those pension plans cover employees of several different qualified pension plans, in which case it would not be possible to sustain a one-plan view. ##### [715-30-55-15](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-15) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:e76c324c844d14980d36f9edc304ce481e7b96a641bf1cca07578cd4e31afcbd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Example 4 (paragraph [715-30-55-118](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-118)) for an illustration of attribution of pension benefits to a qualified pension plan (for tax purposes) and an excess benefit pension plan. ##### [715-30-55-16](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-16) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:bcf4f903151018a54a653b7541bed24afc7c805f4bece17003f54d3cc516dc31 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [715-30-35-34](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-34) describes circumstances under which a substantive commitment is the basis for accounting beyond the written terms of a pension plan. ##### [715-30-55-17](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-17) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:a5eb041309fca1ef171c1af2857b95b321b047cc2ab73879c42e419575e57a59 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The determination of whether a substantive commitment exists to provide pension benefits for employees beyond the written terms of the pension plan's formula requires careful consideration of all the facts and circumstances surrounding the pension plan. Actions of the employer, including communications to the employees, can demonstrate the existence of that commitment. ##### [715-30-55-18](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-18) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:64da7d60cc59c8d59da940a0ea830ed868b946e581c42c8205016aa7526a5599 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. However, a history of retroactive [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.") is not enough, in isolation, to establish a substantive commitment. Absent other evidence of a substantive commitment, such a history should be considered in determining the appropriate amortization periods for [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.") as discussed in paragraph [715-30-35-14](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-14). An employer's accounting for its pension plan should not anticipate a retroactive plan amendment that is not part of a series of retroactive plan amendments necessary to effect a substantive commitment to have a formula greater than its written form. ##### [715-30-55-19](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-19) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:d4e6e1ba48573dba512357b0550bce4ed0a797f79fd452055aedfd2079b4fa7f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An employer may have a substantive commitment to have a formula greater than the pension plan's written formula. There may be a difference between the effects of a retroactive plan amendment that were anticipated as part of that substantive commitment and the effects of the actual retroactive plan amendment. If that difference results from an intended modification of the formula for which there is a substantive commitment, the accounting shall be that prescribed in paragraphs [715-30-35-10 through 35-17](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-10) for a retroactive plan amendment. Otherwise, that difference is a gain or loss subject to the accounting specified in paragraphs [715-30-35-18 through 35-27](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-18) . ##### [715-30-55-20](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-20) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:c0f0f0206972c46bf36a2ef21a62a81b06651154367c3fb7e8bf02486b5109ab Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [715-30-35-31](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-31) provides guidance on how the service cost component of net periodic pension cost shall reflect estimates of future compensation levels. It is not always necessary for assumed compensation levels to change each time assumed discount rates (and expectations of future inflation rates inherently contained in the assumed discount rates) change. Rather, that paragraph requires consistency based on the incorporation of expectations of the same future economic conditions. That paragraph does not require that both assumptions contain the same future inflation component unless that would be appropriate under the circumstances to reflect the best estimate of the pension plan's future experience. For example, an employer that competes with significant foreign entities may not increase its assumed compensation levels even though assumed discount rates increase because the employer expects that it could not successfully compete in the future if its labor costs increased at a rate greater than that already assumed. Another employer would increase its assumed compensation levels if assumed discount rates increased because changes in that employer's labor costs over time have been highly correlated with changes in inflation rates and the employer expects that correlation to continue. ##### [715-30-55-21](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-21) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:a942ae871f215d41c7b249c5ad82a6ac843ea776ba41b36d725028f6f1b06ad6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Changes under existing law in benefit limitations, for example, such as those imposed by Section 415 of the U.S. Internal Revenue Code, that would affect benefits provided by a pension plan should be anticipated in measuring the service cost component of net periodic pension cost and the projected benefit obligation. If the existing law provides for indexing or has a schedule of changes inherent in it, those effects should be considered in determining the service cost component of net periodic pension cost and the projected benefit obligation to the extent consistent with other assumptions (that is, salary and inflation). ##### [715-30-55-22](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-22) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:f7e1dd3a1d12320ad7dd1dcbccaf8a1d386c3fe02124ca52e3f77ad90612336e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Provisions of a law, for example, Section 415 of the U.S. Internal Revenue Code, may be incorporated by reference into a pension plan's formula thereby limiting certain participants' accumulated benefits. In such cases, the determination of the pension plan's accumulated benefit obligation should not reflect the current limitation of the law if the pension plan's formula requires automatic increases in accumulated benefits as each change in the limitation under existing law occurs and future service is not a prerequisite for participants to receive those increases. The determination of the pension plan's accumulated benefit obligation should reflect those increases in the limitation under existing law that would be consistent with the pension plan's other assumptions. As described, the pension plan formula incorporates the type of automatic benefit increases addressed in paragraph [715-30-35-35](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-35). However, if employees would not automatically receive those pension benefit increases should they retire or terminate their service, then that paragraph would proscribe anticipating those increases and, therefore, the current limitation would be used in determining the accumulated benefit obligation in that situation. ##### [715-30-55-23](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-23) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:0d03b48ea10107e327172fe20dfb25845d4eb5fbd03f5bcc96cfe700fae2d9eb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [715-30-35-43 through 35-46](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-43) establish the requirements for discount rates to be used in measurements of the vested, accumulated, and projected benefit obligations and the service and interest cost components of net periodic pension cost. ##### [715-30-55-24](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-24) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:e077fa78a9ccac2aca7e772775df7bb8abd8262cf13d895b0537ee81f5640554 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The assumed discount rates used to discount the vested, accumulated, and projected benefit obligations may be different if the employer can justify such differences in terms of the paragraph [715-30-35-46](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-46) requirement to make the best estimate of the assumed discount rates. For example, different rates should be used to measure the pension obligations for active and retired employees if necessary to reflect differences in the maturity and duration of pension benefit payments. The assumed discount rates for pension benefits that mature in a particular year shall not differ, however, regardless of whether the obligation for those pension benefits is presently classified as a vested, accumulated, or projected benefit obligation. ##### [715-30-55-25](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-25) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:dc9d6a6cacee84e50b949da9793cd5b25f671c9184d994ddab8c0a8c19e31b33 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An employer shall not select arbitrarily the assumed discount rates from within a range but shall select the best estimate of the interest rates at which the pension benefits could be effectively settled at that point in time. ##### [715-30-55-26](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-26) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:b2049f4f52bd97218f8f69344b5aaf930457acb3b497cd1f99156bbd3bc3bca0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A change in the basis of estimating assumed discount rates, for example, by using high-quality bond rates for one year and annuity rates for the following year, is not a change in method of applying an accounting principle because of the objective of selecting assumed discount rates to determine the interest rates inherent in the price at which the pension benefits could be effectively settled—currently. ##### [715-30-55-27](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-27) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:beab784d42e2cb2ec602b4ed21a5453bc31b3acf4cbbe2a5b06efd5dfb8acbc5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If an employer that previously used AA bond rates believes in a subsequent year that, in consideration of its pension plan's particular facts and circumstances, the interest rates that would be inherent in an effective [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 pension benefits are now more closely reflected by the rates implicit in current prices of annuity contracts, then those rates should be used and the change is viewed as a change in estimate; the estimate being the determination of the effective settlement rates. The key is that the employer is using the rates implicit in current prices of annuity contracts as the basis to determine the best estimate of the effective settlement rates. The decision to use a particular methodology in a particular year does not mean that the employer must use that methodology in subsequent years. A change in the facts and circumstances may warrant the use of a different source that better reflects the rates at which the obligation could be effectively settled—currently. A position that holds such a change as a change in accounting principle would lend credence to the view that there are two or more acceptable alternatives. That is not the case. The objective is to select the best estimate of the effective settlement rates. ##### [715-30-55-28](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-28) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:222594fc05e77c4c3caf680d29a956cc6ac6231da9113d9e0b39aeda80e52019 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Another aspect of this estimation issue is determining when to change the basis of estimation from one particular methodology to another, for example, AA bond rates to rates implicit in current prices of annuity contracts. There is no prescribed mathematical formula for making that decision. As indicated in the preceding paragraph, the emphasis in selecting assumed discount rates shall be the use of the best estimate. Changes in the methodology used to determine that best estimate should be made when facts or circumstances change, for example, a general decline or rise in interest rates that has not yet been reflected in the rates implicit in the current prices of annuity contracts. If the facts and circumstances do not change from year to year, it would be inappropriate to change the basis of selection, particularly if the intent in changing the basis is to avoid a change in the assumed discount rates. ##### [715-30-55-29](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-29) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:6af598748455ce7ae099820218e11686122e0f640fe68ea90f6c8e99a3242a8b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A pension plan may have a bond portfolio that was dedicated at a yield significantly higher or lower than current interest rates. The historical rates of return as of the dedication date are not acceptable for use in discounting the projected and accumulated benefit obligations to their present value. Although it is acceptable for an employer to look to rates of return on high-quality fixed-income investments in selecting the assumed discount rates, it is the current rates of return on those investments, not the historical rates of return as of the dedication date, that are relevant. ##### [715-30-55-30](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-30) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:2dc8b218b6c6f1dbf007a6497279d08b5a4b2d3fce9bc3a1b2decc21a7063def Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Use of assumed discount rates based on historical rates of return is inconsistent with the paragraph [715-30-35-50](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-50) requirement to value plan assets at fair value. If interest rates decline or rise, the effect of the requirement to use current rates is to increase or decrease the present value of the projected benefit obligation. That increase or decrease in the obligation is a loss or gain that would be offset to the extent of the gain or loss in the fair value of the plan's dedicated portfolio of fixed-income investments. Any net gain or loss is subject to amortization as a component of net periodic pension cost. ##### [715-30-55-31](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-31) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:ce335f52552cebb297181aa43658fac43dfa95e19c6a80b966cff0753beba2f6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Ordinarily, an employer would not want to purchase annuities for that portion of the pension benefit obligation related to future compensation levels and an insurance entity would be unwilling to undertake an unconditional obligation based on future compensation levels without charging increased premiums for the additional risk. Even though a current settlement of the portion of the projected benefit obligation that relates to future compensation levels is unlikely, an employer shall not use those interest rates implicit in current prices of annuity contracts to determine the accumulated benefit obligation, and use interest rates expected to be implicit in future prices of annuity contracts to determine the pension obligation in excess of the accumulated benefit obligation. The use of rates implicit in future annuity prices is not consistent with the requirements of paragraph [715-30-35-46](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-46) to use current settlement rates. ##### [715-30-55-32](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-32) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:bda256f76296df23bd392ed3b6657a4a2d0b0c6f6580f6878ebba868dfbedefc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Those factors that are relevant for determining the timing and amount of estimated future annuity payments shall not be reflected by an implicit approach to selecting discount rates. Once the estimated future annuity payments are determined, the discounting process using an explicit approach does not consider anything other than the time value of money for purposes of determining the single sum that, if invested at the measurement date, would generate the necessary cash flows to pay the pension benefits when due (the sum necessary to settle effectively the pension obligation assuming no future experience gains or losses). ##### [715-30-55-33](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-33) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:2da57db68d2403723f8b6c3b7cae03415fac2d030a30b04245892efb68ee0c4e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As required by paragraph [715-30-35-43](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-43), the assumed discount rates used to determine the projected, accumulated, and vested benefit obligations shall reflect the interest rates inherent in the price at which the pension benefits could be effectively settled—currently. However, how the accumulated benefit obligation or the projected benefit obligation (before discounting) is determined, that is, whether assumptions as to future inflation or compensation levels are considered, is not relevant in selecting discount rates. ##### [715-30-55-34](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-34) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:92a7b5f4dc1e2664c01fce5e3fd5e3967ad8ab90b43691a83c2ffaf66fb4f1d4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [715-60-55-4](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-4) for a discussion of the relationship of discount rates used to measure a pension benefit obligation to discount rates used to measure an other postretirement benefit obligation. ##### [715-30-55-35](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-35) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:c080c42ac0055e3721feee762805a9419744d10abb7446f9e4331719544e8f36 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The definition of [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.") excludes amounts accrued by the employer but not yet paid to the plan if the exclusion is intended to relate to a recognized pension liability. However, if transferable securities issued by the employer are included in plan assets, the measurement of plan assets should also include the interest accrued but not yet received on those securities. ##### [715-30-55-36](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-36) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:df7d7c08cf35db7ce634cbaf1b2afa84c17b0aebf98b4b85e42dae91844b9d71 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An employer may have a nonqualified pension plan (for tax purposes) that is funded with life insurance policies owned by the employer. The cash surrender value of life insurance policies, if the employer is the owner or beneficiary, do not qualify as plan assets and the accounting for those policies should be in accordance with Subtopic 325-30. ##### [715-30-55-37](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-37) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:216225c19d082f30e214225807c86bab647b4f7a51345261708754c36f19efeb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An employer may have several pension plans with similar plan assets and may elect to use a market-related value approach to value those plan assets. While paragraph [715-30-35-69](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-69) provides for the separate application of the guidance in this Subtopic to each plan, an employer should use different asset valuation methods for similar plan assets only if the pension plans' inherent facts and circumstances justify the difference in methodology. Otherwise, the use of a variety of asset valuation methods for similar plan assets is inconsistent with the objective of enhancing the comparability of reported pension information. ##### [715-30-55-38](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-38) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:e6e86257a94c3741b62de458e5d74dcd3bd885443c9d17b3ef5575ca1d165f82 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The asset valuation method selected for each class of plan assets should accomplish the objective of recognizing changes in the fair value of those plan assets in a systematic and rational manner over not more than five years. Once that method is selected, it should be applied consistently for that class of plan assets as should the method for dividing plan assets into classes. There is no limitation on the number of classes into which plan assets may be divided for purposes of selecting asset valuation methods for determining 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."). ##### [715-30-55-39](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-39) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:ec74ba65068d31b53c88f05f7f980e56ebda3aaa15477e630702e47d72d9ff11 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The use of a market-related value of plan assets affects the determination of net periodic pension cost in two ways. First, the market-related value of plan assets is the basis on which the expected return on plan assets is computed. Second, to the extent that gains or losses based on the fair value of plan assets are not yet reflected in the market-related value of plan assets, such amounts are excluded from the net gain or loss included in accumulated other comprehensive income that is subject to amortization beginning in the following year. Although those excluded gains or losses eventually affect net periodic pension cost, their impact is delayed through use of a market-related value of plan assets. ##### [715-30-55-40](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-40) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:8fb1bed3b6245333dceb2245f29c92b15c30c06c5661a5ca553a06c047fb144a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The definition of market-related value of plan assets contemplates the use of systematic and rational methodology that reflects only the changes in fair value of plan assets between various dates. An example of an unacceptable method for determining the market-related value of plan assets follows. It is not acceptable because it introduces a factor (see layer \[b\]) that can be unrelated to the change in the fair value of plan assets. This example of an unacceptable market-related value of plan assets is determined with a total return-on-plan asset component consisting of three layers: 1. a An expected return-on-plan asset component based on the beginning-of-year market-related value of plan assets, cash flow during the year, and 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.") 2. b An amount equal to the change in the accumulated benefit obligation that resulted from any change during the year in the assumed discount rates used to determine the accumulated benefit obligation (The amount is reduced pro rata if plan assets are less than the accumulated benefit obligation.) 3. c A variance component equal to a percentage (for example, 20 percent if a 5-year-averaging period is used) of the difference between the [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.") based on the fair values of those plan assets and the expected return on plan assets derived from component layers (a) and (b). ##### [715-30-55-41](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-41) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:5a594e6c0bb829484f5b14ae4480d93b5f26e38ec1c24c73c10757ef48b37929 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [715-30-35-60](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-60) provides guidance on accounting for insurance contracts and distinguishes between insurance contracts that are in substance the equivalent purchases of annuities and other contracts. Paragraph [715-30-35-61](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-61) explains that certain attributes of annuity contracts result in accounting that is different in this Subsection from the accounting specified in the Settlements, Curtailments, and Certain Termination Benefits Subsections in this Subtopic. ##### [715-30-55-42](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-42) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:2aa13fdb28d7fcdcc3b85901783cfbeb5b3ef326e825106383db6dba69719f08 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Guaranteed investment contracts are not annuity contracts because they transfer only investment risk to the insurer. The insurer does not unconditionally undertake a legal obligation to provide specified pension benefits to specific individuals. For a guaranteed investment contract with a specified maturity date and for which there is no intent to liquidate the contract before that date, evidence of the fair value of the guaranteed investment contract might be obtained by looking to current yields on fixed-maturity securities having similar risk characteristics and duration. ##### [715-30-55-43](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-43) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:2e32daa44d55109a5c3d61feb769e9137731ddc64060904a96d85cd1641f585e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In an immediate participation guarantee investment contract, the market value adjustment should be considered in determining its fair value because, in effect, the contract value adjusted for any such market value adjustment represents the cash surrender value referred to in paragraph [715-30-35-60](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-60). If an immediate participation guarantee investment contract can be converted into an [annuity contract](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."), the conversion value of the contract should be considered in determining its fair value. The evidence of fair value noted for guaranteed investment contracts in the preceding paragraph should also be considered for immediate participation guarantee investment contracts. ##### [715-30-55-44](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-44) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:8d615fb071b8184b2b9f58de1f83896e95419a7b478aa2b0756c61b3c554ba77 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following implementation guidance addresses issues related to amounts that are included in accumulated other comprehensive income. ##### [715-30-55-45](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-45) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:01654de0311aab8ed2ffc3679051e930f7d19494a474c7a5c82b4cf36648bc44 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The future service periods of employees expected to receive benefits is one of the inputs into amortization calculations specified in paragraphs [715-30-35-4 through 35-26](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-4) . ##### [715-30-55-46](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-46) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:efda7abe8ced86f962681c4311054593fbbeb1b896605919fc40d723c1e2d4e0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In determining the periods for amortization of prior service cost included in accumulated other comprehensive income, minimum amortization of net gain or loss included in accumulated other comprehensive income, or amortization of the transition asset or obligation remaining in accumulated other comprehensive income, an employer shall not include the service periods of employees who are expected to receive only a return of their contributions (plus interest, if applicable) to a contributory [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.)") in determining the future service periods of employees expected to receive benefits under that pension plan. Only the future service periods of those employees who are expected to receive an employer-provided benefit shall be included. ##### [715-30-55-47](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-47) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:b2470efa3a90087676090247fc996e65edba4277ed8ba38cd4091d562702190a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The service periods of employees expected to terminate before their benefits are vested shall also not be included in the determination of the average remaining service period of employees expected to receive benefits under the pension plan. Only the service periods of those employees working as of the date for which the determination is made and who are expected to actually receive employer-provided benefits are included. ##### [715-30-55-48](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-48) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:bed0124cd8c4b330257d65ac11392e2f72a3b37203f20afd1523d4639ebf6b0c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If all or almost all of a plan's participants are inactive, paragraphs [715-30-35-11](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-11) and [715-30-35-24](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-24) provide for the average remaining life expectancy of the inactive participants to be used instead of average remaining service periods. There is no specific threshold for determining if a pension plan has almost all inactive participants for purposes of selecting the amortization period for certain components of net periodic pension cost. The threshold for using the average life expectancy of inactive participants requires judgment based on the facts and circumstances of the particular pension plan. ##### [715-30-55-49](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-49) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:fccd5e69613b84a6361bcdf9e632a1a0eedef990352e070a54ec309e9bc40e71 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In the event that all or almost all of a pension plan's participants are inactive due to a temporary suspension of the pension plan (that is, for a limited period of time, employees will not earn additional defined benefits), the minimum amortization of a net gain or loss included in accumulated other comprehensive income shall not be determined based on the average remaining life expectancy of the temporarily inactive participants. Instead, the minimum amortization of a net gain or loss included in accumulated other comprehensive income shall be determined based on the average remaining service period of the temporarily inactive participants expected to receive benefits under the pension plan. ##### [715-30-55-50](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-50) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:f7593e173e4159717bff918fbaecc459a16b0dfc8bebaf0dd14ed816bee47fc6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In the event that all employees covered by a pension plan are terminated but not retired, the minimum amortization of a net gain or loss included in accumulated other comprehensive income shall be determined based on the average remaining life expectancy of the inactive participants. The situation described could arise, for example, if a division with its own pension plan is sold by the employer thus terminating the related employees, but the pension plan remains in existence and it retains the obligation for benefits accrued to the date of sale. In that situation, the minimum amortization of a net gain or loss included in accumulated other comprehensive income should be determined based on the average remaining life expectancy of the inactive participants. ##### [715-30-55-51](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-51) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:33b60409f8668d83815ad6f6a326ae039e541f46b816146683e75c24d6108371 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [715-30-35-14](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-14) identifies the need to assess the individual circumstances and the substance associated with regular plan amendments. If an employer has a history of granting retroactive plan amendments every three years, for example, as part of union negotiations, the period benefited may be three years. If employees expect the pattern to continue, the future economic benefits to be obtained from a retroactive plan amendment may not continue if the pattern is broken; effectively, the future economic benefit of each retroactive plan amendment may expire over the period of the union contract (in this case, three years). In that situation, amortization of prior service cost included in accumulated other comprehensive income over a three-year period would be appropriate. Whether three years is the appropriate amortization period for a retroactive plan amendment that is part of a three-year amendment pattern shall be determined based on the facts and circumstances of the particular situation. ##### [715-30-55-52](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-52) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:9f7183071f98287b74494ec2791a9c2ce44ae4af57c058078564b9b7ffa40cf4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. There may be a transition asset remaining in accumulated other comprehensive income that is reduced when a settlement gain is recognized. Similarly, a transition asset or obligation remaining in accumulated other comprehensive income may be reduced as part of the accounting for 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."). The balance of the transition asset remaining in accumulated other comprehensive income after a settlement gain or the balance of the transition asset or obligation remaining in accumulated other comprehensive income after a curtailment, shall be amortized on a straight-line basis over the remainder of the amortization period determined at transition. ##### [715-30-55-53](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-53) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:25ebe9b045da1b53d66a573c93729c496bd45fc1030f342fc68d402a68ed1a7a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In the event that a pension plan curtailment occurs causing almost all of the pension plan's participants to become inactive, the employer shall continue to amortize any transition asset or obligation remaining in accumulated other comprehensive income (the amount remaining after the employer accounts for the curtailment as required by paragraphs [715-30-35-92 through 35-93](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-92) ) using the same amortization period determined at transition. ##### [715-30-55-54](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-54) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:bae1686d9ad745f74dd72b96cc0cb77f8d61d5641454b6bd1a4975969716225c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An employer may grant a retroactive plan amendment that reduces the projected benefit obligation (a negative retroactive plan amendment). Paragraph [715-30-35-17](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-17) indicates that the reduction in benefits shall be used first to reduce any prior service cost included in accumulated other comprehensive income. If several prior retroactive plan amendments in the aggregate have resulted in prior service costs included in accumulated other comprehensive income that exceed the effects of the negative retroactive plan amendment, unless the retroactive plan amendment that reduces benefits can be specifically related to a prior retroactive plan amendment, any systematic and rational method (for example, last-in, first-out \[LIFO\]; first-in, first-out \[FIFO\]; or pro rata), applied on a consistent basis, is acceptable for use to apply the guidance. ##### [715-30-55-55](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-55) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:f9c1ce309cb950b91e50c8460cd86c358797efe3db777c66810cbe1d00f563a9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An employer may amend a pension plan to delete a provision that a percentage of the employee's accumulated benefits be paid to the employee's spouse upon death of the employee before a specified age. Such a reduction in benefits shall be accounted for as a retroactive plan amendment. ##### [715-30-55-56](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-56) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:97c4ddb82602a7169cd3a95ac63f72ded01d5c0a5f6bacec5690b1e5db3fed66 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [715-30-35-68](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-68) provides guidance on measuring net periodic pension cost when measurements more recent than the previous year-end are available and establishes that the measurement of net periodic pension cost shall be based on the most recent measurements of plan assets and obligations. ##### [715-30-55-57](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-57) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:f4934f513222a18ecf0355a8751ffb7ee53a744725de1b5744ed53159e43e983 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. It may be necessary to have an actuarial valuation as of the employer's fiscal year-end (for example, December 31) in addition to the actuarial valuation made as of the pension plan's preceding year-end (for example, June 30). In such an example, net periodic pension cost for the year should be the sum of two six-month measurements (January 1-June 30, determined as of the preceding December 31; July 1-December 31, determined as of the preceding June 30). ##### [715-30-55-58](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-58) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:80d1c735cbdd1a630d27ee0a453b046428745cddc34547e0cb9efec0810937e7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If an employer that has a December 31 financial report date measures its plan assets and obligations as of an interim date during its fiscal year, for example, because of a significant retroactive plan amendment, net periodic pension cost for the remainder of the fiscal year should be based on the most recent pension measurements. Net periodic pension cost for the preceding interim periods should not be adjusted. ##### [715-30-55-59](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-59) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:3f7bf27813ed386ef503434578d1aac399232296d89ff59ea916285b0960cd32 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An employer may use a measurement date of December 31 but not complete the actual measurements until some time later, for example, in January. In this situation, the determination of the pension obligations should not be based on the assumed discount rates and other actuarial assumptions as of January. The employer should use the actuarial assumptions, including assumed discount rates, that were appropriate as of the measurement date of December 31 because the objective is to determine the various pension measurements, including plan assets, as of that date. ##### [715-30-55-60](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-60) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:c6187fa05052a8c30d43ecc884389c926f094cc3fb0a0a840aa962d79fa854fc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The projected benefit obligation reflects 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 attributed to employee service rendered before the date of the employer's fiscal year-end statement of financial position, with limited exceptions as addressed in paragraphs [715-30-35-62 through 35-68](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-62) . The measurement of that obligation shall be based on actuarial assumptions appropriate for the date of the employer's fiscal year-end statement of financial position (for example, [turnover](https://asc.understandingaccounting.org/glossary/t/#turnover "Termination of employment for a reason other than death or retirement."), [mortality](https://asc.understandingaccounting.org/glossary/m/#mortality-rate "The proportion of the number of deaths in a specified group to the number living at the beginning of the period in which the deaths occur. Actuaries use mortality tables, which show death rates for each age, in estimating the amount of pension benefits that will become payable."), [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."), and so forth) and census data as of that date. ##### [715-30-55-61](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-61) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:61a8293952d22912fe2ab6d8755ace5d38d2a9aec51e39ecaaa5f83dbb5d9016 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If an actuarial valuation is made as of a pension plan's year-end and that date precedes the date of the employer's fiscal year-end statement of financial position, it is, however, not always necessary to have another actuarial valuation made as of that date. If an employer is assured that the reliability of the measurement of that obligation determined by rolling forward data based on a valuation before the date of the employer's fiscal year-end statement of financial position is sufficiently high so that the amount of the pension obligation is substantially the same as would be determined by an actuarial valuation as of that date, then another actuarial valuation is not required. This is analogous to the acceptability of having an annual physical inventory taken as of a date before the financial report date if it has been demonstrated that reliance can be placed on perpetual records or another system that reflects subsequent events. ##### [715-30-55-62](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-62) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:03539ceead1ace01fe5fdbb28302bdd6236094edd90f18d9385e54aaeb054709 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Subtopic 715-80 provides guidance on multiemployer plans. Paragraph [715-30-35-70](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-70) provides guidance on [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.") that distinguishes multiemployer from multiple-employer plans and requires that multiple-employer plans be viewed as 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."). The following example illustrates the guidance in that paragraph. ##### [715-30-55-63](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-63) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:f09f5a7adc04eeddd9d17e1f86135b75398c83a68c2970456ffdd1ed8d7eaede Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assume a not-for-profit entity (NFP) has a defined benefit pension plan that covers employees at the national and all local chapters and each chapter is required to contribute to the pension plan based on a predetermined formula (for example, on a percentage-of-salary basis), plan assets are not segregated or restricted on a chapter-by-chapter basis, and if a chapter withdraws from the pension plan, the pension obligations for its employees are retained by the pension plan as opposed to being allocated to the withdrawing chapter. This arrangement should be accounted for as a single-employer pension plan in the NFP's financial statements. However, in each chapter's separate financial statements (if issued) the arrangement should be accounted for as a multiemployer pension plan. It is unclear how an allocation of net periodic pension cost or the overfunded or underfunded status of the defined benefit pension plan would be made if each chapter were to view its respective participation as a single-employer pension plan because the assets are not segregated or restricted by chapter and obligations are not assumed by a withdrawing chapter. Accounting for the pension plan as a multiemployer pension plan requires that a chapter's contribution for the period (in this example, the amount required to be contributed to the pension plan based on a percentage of its employees' salaries) be recognized as net periodic pension cost. A liability would be recognized for any contributions due and unpaid. The disclosures required by Section 715-80-50 do not apply in this situation. Instead, each chapter should disclose the name of the plan in which it participates and the amount of contributions it made in each annual period for which a statement of income (statement of activities for [not-for-profit entities](https://asc.understandingaccounting.org/glossary/n/#not-for-profit-entity "An entity that possesses the following characteristics, in varying degrees, that distinguish it from a business entity: Contributions of significant amounts of resources from resource providers who do not expect commensurate or proportionate pecuniary return Operating purposes other than to provide goods or services at a profit Absence of ownership interests like those of business entities. Entities that clearly fall outside this definition include the following: All investor-owned entities Entities that provide dividends, lower costs, or other economic benefits directly and proportionately to their owners, members, or participants, such as mutual insurance entities, credit unions, farm and rural electric cooperatives, and employee benefit plans.")) is presented, as well as any related-party disclosures required by Subtopic 850-10. ##### [715-30-55-64](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-64) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:b7c23a2519b631dcf145e63046b34df5152f3dd226002c01c889265bf4eaa992 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The conclusions in the preceding paragraph would also be true in a similar parent-subsidiary arrangement if the subsidiaries issue separate financial statements. In a similar arrangement, each subsidiary should account for its participation in the overall single-employer pension plan as a participation in a multiemployer pension plan. The disclosures required by Section 715-80-50 do not apply in this situation. Instead, each subsidiary should disclose the name of the plan in which it participates and the amount of contributions the subsidiary made in each period for which a statement of income or statement of activities is presented. The parent entity should, of course, account for the pension plan as a single-employer pension plan in its consolidated financial statements. ##### [715-30-55-65](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-65) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:81ab0179e35500133539476c7eb6b6c0d2ac1fe9e006e6ce04ee25573603766f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [715-10-15-6 through 15-7](https://asc.understandingaccounting.org/asc/715/10/#715-10-15-6) establish that there are no special provisions applicable to plans or arrangements outside the United States and specifies that, to the extent that those arrangements are in substance similar to plans in the United States, they are subject to the provisions of this Topic. ##### [715-30-55-66](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-66) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:a4f48701ec610982b18c916059632510d86805f978c1740bbeae417fd38e036d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A non-U.S. pension plan may provide death and disability benefits that are greater than the incidental death and disability benefits allowed in U.S. tax-qualified pension plans. The relative level of death and disability benefits paid by a plan that provides primarily pension benefits should not, in itself, cause the pension plan to be in substance different from a U.S. pension plan. ##### [715-30-55-67](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-67) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:f2c365cb71229cb3ff2e57f55b4b27048804d4b0c04b9683126122a54a55b31d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Under certain plans (typically non-U.S. plans) the actuarial present value of the benefits to which an employee is entitled if the employee terminates immediately may exceed the actuarial present value of the benefits to which the employee is entitled at the employee's expected date of separation based on service to date. In those situations, to determine the [vested benefit obligation](https://asc.understandingaccounting.org/glossary/v/#vested-benefit-obligation "The actuarial present value of vested benefits."), the employer may record either the actuarial present value of [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.") to which the employee is entitled if the employee separates or the actuarial present value of the vested benefits to which the employee is currently entitled based on the employee's expected date of separation or retirement as provided for in paragraphs [715-30-35-40 through 35-41](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-40) . ##### [715-30-55-68](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-68) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:57a5db10883b3725ab6a3ea6256a570de295ed695af7e5ff40b084392a389496 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following guidance addresses the accounting for certain arrangements in Japan and Germany. ##### [715-30-55-69](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-69) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:223f635ebe4196493295535d211d9f78290afa2cbb873af9cdc843190f9c72c7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following guidance refers to provisions of the Japanese Welfare Pension Insurance Law; however, it shall not be considered a definitive interpretation of that law for any purpose. ##### [715-30-55-70](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-70) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:dea84d9d0310e57e4f0968869d8917ba362400b2259686b487f085496e1ff80f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In Japan, many large entities have Employees' Pension Fund plans, which are defined benefit pension plans established under the Japanese Welfare Pension Insurance Law. These plans are composed of both of the following components: 1. a A substitutional portion based on the pay-related part of the old-age pension benefits prescribed by Japanese Welfare Pension Insurance Law (similar to social security benefits in the United States) 2. b An entity portion based on a contributory defined benefit pension arrangement established at the discretion of each employer. ##### [715-30-55-71](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-71) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:4dd395491e94e6bbc55ec4c9834cd7514edc1f6b2937f7d0e29a04525dd0ec6c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An employer with an Employees' Pension Fund and its employees are exempted from contributions to Japanese Pension Insurance that would otherwise be required if they had not elected to fund the substitutional portion of the benefit through an Employees' Pension Fund arrangement. The Employees' Pension Fund, in turn, pays both the entity and the substitutional pension benefits to retired beneficiaries out of its plan assets. Benefits of the substitutional portion are based on a standard remuneration schedule as determined by Japanese Welfare Pension Insurance Law, but the benefits of the entity portion are based on a formula determined by each employer or Employees' Pension Fund. The plan assets of an Employees' Pension Fund are managed and invested as a single portfolio for the entire Employees' Pension Fund and are not statutorily attributed to the substitutional and entity portions. The significance of the substitutional portion to the entire Employees' Pension Fund varies. In some plans, the substitutional portion may account for as little as 10 percent of the total projected benefit obligation, while in others it may account for as much as 60 percent of the total projected benefit obligation. ##### [715-30-55-72](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-72) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:092c1c16078416eb56b8f47c6bdd7fd1a35958c557905fb2f485849852a68342 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Employees' Pension Fund arrangements shall be accounted for as single-employer defined benefit plans using a single plan approach. ##### [715-30-55-73](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-73) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:a1642e7a72229c161cc7aaf1ccb91ccc2ab09f905540e85dc8cda440046b3a16 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In June 2001, the Japanese Welfare Pension Insurance Law was amended to permit each employer/Employees' Pension Fund to separate the substitutional portion from its Employees' Pension Fund and transfer the obligation and related assets to the government. Upon completion of the separation, the remaining substitutional obligation and related plan assets, determined pursuant to a government formula, are transferred to a government agency, and the employer/Employees' Pension Fund is released from paying the remaining substitutional portion of the benefits to Employees' Pension Fund beneficiaries. After the separation, both the employer and the employees are required to make periodic contributions to Japanese Pension Insurance, and the Japanese government is responsible for all benefit payments earned under Japanese Welfare Pension Insurance Law. The remaining portion of the Employees' Pension Fund (that is, the entity portion) continues to exist exclusively as a defined benefit pension plan, although, from a legal or regulatory perspective, the Employees' Pension Fund is deemed to have been dissolved and a defined benefit pension plan is deemed newly established when the separation process is completed. After the separation process, an employer may transfer the remaining entity portion of an Employees' Pension Fund into a defined contribution plan. ##### [715-30-55-74](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-74) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:a57a8de9197445c725eadee65ee14de5c69c10b188eedd1587a7a7a162ff2da2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The process of separating the substitutional portion from the entity portion occurs in four phases, but the employer/Employees' Pension Fund may not complete only certain parts of the separation process. Essentially, once an employer/Employees' Pension Fund obtains Phase 2 approval, it must complete the entire separation process. Likewise, assuming the employer/Employees' Pension Fund has obtained the requisite approval from the employees' representative, the separation is subject only to administrative processing by the government. The four phases are as follows: 1. a Phase 1—An employer/Employees' Pension Fund makes an application to the Japanese government for an exemption from the obligation to pay benefits for future employee service related to the substitutional portion. As a prerequisite to making that application, the representative of the employees covered by the plan must agree to the separation. 2. b Phase 2—On or after April 1, 2002 (when the June 2001 amendment to the Japanese Welfare Pension Insurance Law became effective), the Japanese government gives each employer/Employees' Pension Fund an approval of exemption from the obligation for benefits related to future employee service under the substitutional portion. Once that approval is obtained, the employer begins making Japanese Pension Insurance payments directly to the government. 3. c Phase 3—After obtaining an approval of exemption from the obligation for benefits related to future employee service under the substitutional portion, the employer/Employees' Pension Fund must make another application for separation of the remaining substitutional portion (that is, the benefit obligation related to past services). 4. d Phase 4—Within two and a half years from the enactment date of the Japanese Welfare Pension Insurance Law amendment (June 15, 2001), the Japanese government will grant each employer/Employees' Pension Fund the final approval of separation. On obtaining that approval, the remaining benefit obligation of the substitutional portion (that amount earned by past services) as well as the related government-specified portion of the plan assets of the Employees' Pension Fund will be transferred to Japanese Pension Insurance. ##### [715-30-55-75](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-75) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:bb11e2f1c66267a400e2b12711bc241d718ee337e7fb338603434053f735a664 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The entire separation process shall be accounted for upon completion of the transfer to the government of the substitutional portion of the benefit obligation and related plan assets (Phase 4) as the culmination of a series of steps in a single settlement transaction. This guidance is limited to the accounting for the separation of the substitutional portion of the benefit obligation from the entity portion of the benefit obligation in a Japanese Employees' Pension Fund arrangement and the transfer of the substitutional portion and related assets to the Japanese government pursuant to the June 2001 Japanese Welfare Pension Insurance Law amendment. ##### [715-30-55-76](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-76) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:9482144e65722992983444df1e306a0ac31f3a3276c7352438a12553a226a88c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. At the time the assets are transferred to the government in an amount sufficient to complete the separation process, the transaction is considered to be complete and the elimination of the entire substitutional portion of the benefit obligation shall be accounted for as a settlement at that time. Immediately before the separation, in accordance with the guidance in the Settlements, Curtailments, and Certain Termination Benefits Subsections in this Subtopic, the entire projected benefit obligation would be remeasured at fair value, including the effects of anticipated future salary increases. That remeasurement would include the effects of any changes in actuarial assumptions as well as actual experience since the previous measurement date. The obligation would be measured at current market rates of interest that could be obtained in a transaction with a third-party, nongovernmental entity to settle the obligation. On the basis that the government had accepted responsibility for all substitutional benefits earned after Phase 2 approval, the remeasurement of the projected benefit obligation shall include only benefits earned under the substitutional arrangement before Phase 2 approval. ##### [715-30-55-77](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-77) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:7e62c47acce9f348df8402de412dd5bce6226d26faeaa02b47dc5f89de38bef1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In accounting for the settlement of the substitutional portion of the obligation, a proportionate amount of the net gain or loss included in accumulated other comprehensive income related to the entire Employees' Pension Fund would be recognized as a settlement gain or loss. The proportionate amount of the net gain or loss to be recognized would be determined based on the proportion of the projected benefit obligation settled to the total projected benefit obligation, both of which would exclude the previously accrued salary progression for purposes of that calculation. After the separation, the remaining assets and obligation of the Employees' Pension Fund, along with the prior service costs included in accumulated other comprehensive income and gains and losses included in accumulated other comprehensive income would continue to be accounted for pursuant to the requirements of this Subtopic. ##### [715-30-55-78](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-78) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:1ab16d6d73bfd1a3cc2fde5d00558f5a45602d59b975fac238307727289928b8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The difference between the obligation settled and the assets transferred to the government, determined pursuant to the government formula, shall be accounted for as a subsidy from the government pursuant to applicable generally accepted accounting principles (GAAP). The derecognition of previously accrued salary progression at the time of settlement, discussed in the preceding paragraph, shall be accounted for separately from the government subsidy. ##### [715-30-55-79](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-79) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:e0625ec172eccefb6065c90787af4d13a162ac5504b2a7d7a6d323bddf70a97a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Example 5 (paragraph [715-30-55-121](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-121)) for an illustration of the application of this guidance on a transfer to the Japanese government of the substitutional portion of employee pension fund liabilities. ##### [715-30-55-80](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-80) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:808bb9638c04b0e5bb7edf7658ec817e34892ba5b7ba42193d6748a9c3320fd9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following guidance refers to provisions of German legislation related to an early retirement program; however, it shall not be considered a definitive interpretation of that legislation for any purpose. ##### [715-30-55-81](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-81) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:ee67397eded7146a656a78dabea8e6c6b3f9a89b67d8e44208c11f1c6fe7bf18 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Altersteilzeit arrangement is an early retirement program in Germany designed to create an incentive for employees, within a certain age group, to transition from (full- or part-time) employment into retirement before their legal retirement age. The program was created by legislation in 1996 and through subsequent extensions is now scheduled to expire in 2009. Employers taking advantage of this legislation must sign a contract under the legal framework outlined in the legislation with the workers' council or unions or with the individual employees (for employees not within a workers' council or union) to qualify for subsidies from the government. The German government provides a subsidy (reimbursement) to an employer for the bonuses paid to the employee and the additional contributions paid into the German government pension scheme under an Altersteilzeit arrangement for a maximum of six years. To receive this subsidy, an employer must meet certain criteria (typically, an employer must hire replacement employees from currently registered unemployed persons or former trainees). ##### [715-30-55-82](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-82) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:a6e9e93c096f91ac186b53fe5434dfdaef396d9db72470f91a98a599dec78c52 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This guidance addresses specific features in Altersteilzeit arrangements. This guidance may also apply to other types of benefit arrangements with the same or similar terms. ##### [715-30-55-83](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-83) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:2b2df1c90f26d312c3fba74e4b70fef0a419a49d145f8db0f76c99a6774ef2cf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Typical features of an Altersteilzeit arrangement include the following: 1. a To enroll in an Altersteilzeit arrangement, an employee must sign an Altersteilzeit contract with the employer. The employee can sign the Altersteilzeit contract before being eligible to begin working under the Altersteilzeit arrangement. An employee may begin working under the Altersteilzeit arrangement only upon attaining the age such that upon completion of the Altersteilzeit period he or she will be eligible for the normal government retirement benefits (typically 63 years old for men and 62 years old for women). The Altersteilzeit period consists of the period from when the employee begins to work under the Altersteilzeit arrangement until the employee is no longer under a legal work arrangement with the employer (terminated from the entity). This period is generally one to six years, depending on the specific Altersteilzeit arrangement and the age of the [participant](https://asc.understandingaccounting.org/glossary/p/#participant "Any employee or former employee, or any member or former member of a trade or other employee association, or the beneficiaries of those individuals, for whom there are pension plan benefits or other accumulated plan benefits."). 2. b An employer is required to allow participation in the Altersteilzeit arrangement without restriction until participation reaches 5 percent of the total work force. After 5 percent participation is achieved, an employer has, at its discretion, the right to determine whether employees are accepted into the Altersteilzeit arrangement. However, in some situations, a lower mandatory participation cap is agreed to between an employer and the workers' council. 3. c In most cases, an employee is required to work for a minimum period of time with any employer before being eligible for the Altersteilzeit arrangement; prior employment with the present employer is not necessary. 4. d The arrangement typically offers two alternative arrangements for participating employees: 1. 1 Type I: participant works 50 percent of the normal full-time schedule for each year of the entire Altersteilzeit period and receives 50 percent of his or her salary each year. 2. 2 Type II: participant works full-time for half of the Altersteilzeit period, the active period, and then does not work for the remaining half, the inactive period, and receives 50 percent of his or her salary each year during the entire Altersteilzeit period. Under both alternatives, participants receive an annual bonus, which varies by employer, but will generally equal 10-15 percent of their most recent regular pay before the start of the Altersteilzeit period; thus, the regular combined paid compensation will normally equal about 60-65 percent of the participant's most recent regular pay before the start of the Altersteilzeit period. The employer also will make additional contributions into the German government pension scheme for participants (to compensate for the fact that the employee has not been working at his or her previous level during the Altersteilzeit period) during the entire Altersteilzeit period. Contributions into the German government pension scheme (as well as length of service) determine the amount of pension benefits the employee will receive from that scheme. Therefore, by making additional contributions into the German government pension scheme during the entire Altersteilzeit period, the pension benefits paid to the employees will be higher than they would have been had the contributions been based solely on the employees' active service during the Altersteilzeit period. 5. e Employees must provide service to the employer for the required portion of the Altersteilzeit period (the active period) to receive the full bonus. If a participant dies, voluntarily leaves the entity, or is otherwise terminated before fulfilling the service period requirement, the Altersteilzeit contract will be unwound and the total compensation received by the participant will be adjusted to the amount that the participant would have received if he or she had not participated in the Altersteilzeit arrangement (salary is contractually set at the amount the employee earned just before the Altersteilzeit period). For example, if an employee enters into a four-year Type II Altersteilzeit arrangement and leaves the entity after one year, the employee will receive (for the one year worked) all of his or her pre-Altersteilzeit period annual salary and will not receive any Altersteilzeit bonus. 6. f During the inactive period under the Type II Altersteilzeit arrangement, participants are legally under a work contract with the employer (considered employees); however, an employee is not permitted to return to active work. Otherwise, the employer would lose any government subsidy. 7. g Under the Type I arrangement, the employer can claim the subsidy for a replacement worker hired during the entire Altersteilzeit period. Under the Type II arrangement, an employer could only claim the subsidy for a replacement worker hired during the inactive Altersteilzeit period. Therefore, under the Type II arrangement, the reimbursement each year during the inactive period would be equivalent to two years of bonus payments and additional contributions made into the German government pension scheme. ##### [715-30-55-84](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-84) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:82b54330fcd82c39b372fb96e44f7d0361bc465177545dd656500210c1398db6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The salary components of Type I and Type II Altersteilzeit arrangements (excluding the bonus and additional contributions into the German government pension scheme) shall be recognized over the period from the point at which the Altersteilzeit period begins until the end of the active service period. Additionally, the portion of the salary that is deferred under a Type II arrangement shall be discounted if payment is expected to be deferred for a period longer than one year. ##### [715-30-55-85](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-85) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:21838ddb97b4873a1baa6a0142a8bd87751264e1a86f56d1e24f2bb2e4e71220 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The bonus feature and the additional contributions into the German government pension scheme (collectively, the additional compensation) under a Type II Altersteilzeit arrangement shall be accounted for as a postemployment benefit under the guidance in Topic 712. An entity shall recognize the additional compensation over the period from the point at which the employee signs the Altersteilzeit contract until the end of the active service period. ##### [715-30-55-86](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-86) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:3dea5572074480f51de19985fd29726a83d5e6bc4f8185d8716fee859ebdb1fc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The employer shall recognize the government subsidy when it meets the necessary criteria and is entitled to the subsidy. ##### [715-30-55-87](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-87) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:1a17f0f758f037303cc9e700f1b677dffa134414f0f79647abd26f6f09b87c67 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following implementation guidance addresses issues relating to either the combination of two or more of an employer's pension plans into one plan, or the division of one pension plan into two or more separate pension plans. ##### [715-30-55-88](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-88) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:4833c86484db37a177ec29634994427bee0cfebdc401859d649581f5b8bdcd47 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An employer may combine several of its pension plans resulting in the assets of each predecessor pension plan being available to satisfy the previously existing obligations of the other. Except for prior service costs included in accumulated other comprehensive income, similar amounts of the predecessor pension plans shall be aggregated, and a single amortization schedule for each of the combined amounts shall be used in this situation. That is, the amortization of the transition asset or obligation remaining in accumulated other comprehensive income shall reflect a reasonably weighted average of the remaining amortization periods used by the separate pension plans for that item and the minimum amortization of the aggregate net gain or loss included in accumulated other comprehensive income shall reflect the average remaining service period of the combined employee group. The prior service cost included in accumulated other comprehensive income of each pension plan at the time of the combination shall continue to be amortized as previously determined based on specific employee groups covered. ##### [715-30-55-89](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-89) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:b2e1cdc7631a1f46667893bfd90116ab6d4d728874be021d49651307c19fe28b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Example 6 (paragraph [715-30-55-122](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-122)) for an illustration of the accounting when two plans are combined. ##### [715-30-55-90](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-90) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:3916f5cc67a63bf513dd7293d57153765eb0d916b9c0c704153a12ae5cdb2551 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An employer may divide a pension plan into two or more separate pension plans. Using paragraph [715-30-35-79](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-79) as guidance, an employer shall allocate the transition asset or obligation remaining in accumulated other comprehensive income and the net gain or loss included in accumulated other comprehensive income, in proportion to the projected benefit obligations of the two surviving plans. Prior service cost included in accumulated other comprehensive income shall be allocated to the surviving plans based on the applicable individuals included in the employee groups covered. ##### [715-30-55-91](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-91) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:f1cd0f2514332cfe097c0bd815ae80a51af1f24bc6dbfe58906941ab4d2f4956 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Example 7 (paragraph [715-30-55-124](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-124)) for an illustration of the division of one pension plan into separate pension plans. ##### [715-30-55-92](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-92) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:69896efc40a99207734b5f1632627c9aeb11b6b120c39ae6761f2e0306f942db Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An employer may incorporate a division of its operations, subsequently spin it off to owners of the entity, and transfer to the new entity's pension plan either a pension benefit obligation related to the employees transferred as part of the spinoff or plan assets. Paragraph [845-10-55-1](https://asc.understandingaccounting.org/asc/845/10/#845-10-55-1) provides guidance on the accounting for such a transaction in a spinoff of nonmonetary assets to owners. #### Illustrations ##### [715-30-55-93](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-93) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:aaffdaa62d4d18c3b557486ffe09ee1ee1d37364b8b1fe9e86d1f1306fd09e5d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the prior service cost amortization guidance in paragraphs [715-30-35-11](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-11) and [715-30-35-13](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-13) and is based on the expected future years of service of participants active at the date of the amendment. ##### [715-30-55-94](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-94) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:1859d845eec6d5ea6f7d506f93ba9412d3d75e0ace68f0c5f9566da9143c8acc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following Cases illustrate: 1. a Assignment of equal amounts of cost to future years of service (Case A) 2. b Use of straight line amortization to assign costs over average remaining service period (Case B). ##### [715-30-55-95](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-95) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:5d8986097da58be5bc9d36859a060aea2e5399b8f2ee5a7ef4ba2f6b2046bc55 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Cases A and B share all of the following calculations and assumptions. ##### [715-30-55-96](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-96) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:13714b2dbc77a67bddb939dddb29a27a004fcbc0256d42efdb23f7bc31f98e90 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. On January 1, 20X0, Entity A grants retroactive credit for prior service pursuant to a plan amendment. The amendment generates prior service cost of $750,000 that is recognized as an increase in the pension liability and a corresponding charge to other comprehensive income. The prior service cost resulting from the plan amendment is subsequently amortized as a component of net periodic pension cost based on the expected future years of service of active participants. Other comprehensive income is adjusted each period as prior service cost is amortized. ##### [715-30-55-97](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-97) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:986c380258d8539d9c3ddeb9cdd713e6e8a16407a5b26c28fa9668ce6ea11f64 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table illustrates the calculation of the expected future years of service for the defined benefit plan of Entity A. At the date of the amendment (January 1, 20X0), the entity has 100 employees who are expected to receive benefits under the plan. Five percent of that group (5 employees) are expected to leave (either retire or quit) in each of the next 20 years. Employees hired after that date do not affect the amortization. Initial estimates of expected future years of service related to each amendment are subsequently adjusted only for a curtailment. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-B7EF85AD-265F-43C5-957E-11A19B9B6A62-low.gif) Determination of Expected Years of Service Service Years Rendered in Each Year Year Individuals Future Service Years 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 A1-A5 5 5 B1-B5 10 5 5 C1-C5 15 5 5 5 D1-D5 20 5 5 5 5 E1-E5 25 5 5 5 5 5 F1-F5 30 5 5 5 5 5 5 G1-G5 35 5 5 5 5 5 5 5 H1-H5 40 5 5 5 5 5 5 5 5 I1-I5 45 5 5 5 5 5 5 5 5 5 J1-J5 50 5 5 5 5 5 5 5 5 5 5 K1-K5 55 5 5 5 5 5 5 5 5 5 5 5 L1-L5 60 5 5 5 5 5 5 5 5 5 5 5 5 M1-M5 65 5 5 5 5 5 5 5 5 5 5 5 5 5 N1-N5 70 5 5 5 5 5 5 5 5 5 5 5 5 5 5 O1-O5 75 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 P1-P5 80 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 Q1-Q5 85 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 R1-R5 90 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 S1-S5 95 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 T1-T5 100 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 "1,050" Service Years Rendered 100 95 90 85 80 75 70 65 60 55 50 45 40 35 30 25 20 15 10 5 100 95 90 85 80 75 70 65 60 55 50 45 40 35 30 25 20 15 10 5 Amortization Fraction "1,050" "1,050" "1,050" "1,050" "1,050" "1,050" "1,050" "1,050" "1,050" "1,050" "1,050" "1,050" "1,050" "1,050" "1,050" "1,050" "1,050" "1,050" "1,050" "1,050" ##### [715-30-55-98](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-98) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:04be1ea704c456a2b5a65d907636f07a3de5c05ce51a676c1b151c6e5749862f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Calculation of the expected future years of service considers population decrements based on the actuarial assumptions and is not weighted for benefits or compensation. ##### [715-30-55-99](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-99) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:f7cbb895d8400389fa93083c00fdbb9756d7f19968426dfed3ee660cbf5d01ab Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In this Case, each expected future service year is assigned an equal share of the initially determined prior service cost. The portion of prior service cost to be recognized in net periodic pension cost in each of the future years is determined by the service years rendered in that year. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-240FBDC8-7477-4B7F-857C-FEAF9A2BE76B-low.gif) Employers' Accounting for Pensions Amortization of Prior Service Cost Year Beginning- of-Year Balance Amortization Rate Amortization End- of-Year Balance 20X0 " $750,000 " 100/1050 " $71,429 " " $678,571 " 20X1 " 678,571 " 95/1050 " 67,857 " " 610,714 " 20X2 " 610,714 " 90/1050 " 64,286 " " 546,428 " 20X3 " 546,428 " 85/1050 " 60,714 " " 485,714 " 20X4 " 485,714 " 80/1050 " 57,143 " " 428,571 " 20X5 " 428,571 " 75/1050 " 53,571 " " 375,000 " 20X6 " 375,000 " 70/1050 " 50,000 " " 325,000 " 20X7 " 325,000 " 65/1050 " 46,429 " " 278,571 " 20X8 " 278,571 " 60/1050 " 42,857 " " 235,714 " 20X9 " 235,714 " 55/1050 " 39,286 " " 196,428 " 20Y0 " 196,428 " 50/1050 " 35,714 " " 160,714 " 20Y1 " 160,714 " 45/1050 " 32,143 " " 128,571 " 20Y2 " 128,571 " 40/1050 " 28,571 " " 100,000 " 20Y3 " 100,000 " 35/1050 " 25,000 " " 75,000 " 20Y4 " 75,000 " 30/1050 " 21,429 " " 53,571 " 20Y5 " 53,571 " 25/1050 " 17,857 " " 35,714 " 20Y6 " 35,714 " 20/1050 " 14,286 " " 21,428 " 20Y7 " 21,428 " 15/1050 " 10,714 " " 10,714 " 20Y8 " 10,714 " 10/1050 " 7,143 " " 3,571 " 20Y9 " 3,571 " 5/1050 " 3,571 " - ##### [715-30-55-100](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-100) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:3e4482f2f914faee388ce1c25d9cec90fda9c529bacbd1d5e6dfce78194f90d0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To reduce the complexity and detail of the computations shown in Case A, alternative amortization approaches that recognize the cost of retroactive amendments as a component of net periodic pension cost more quickly may be consistently used under the guidance in paragraph [715-30-35-13](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-13). In this Case, Entity A elects to use straight-line amortization over the average remaining service period of employees expected to receive benefits (1,050 future service years/100 employees = 10.5 years), resulting in the following amortization. - ![](https://asc.understandingaccounting.org/asc-img/GUID-BF2228C6-CE2F-44B4-9CFE-C63A59ED5503-low.gif) Amortization of Prior Service Cost Year Beginning-of-Year Balance Amortization (a) End-of-Year Balance 20X0 " $750,000 " " $71,429 " " $678,571 " 20X1 " 678,571 " " 71,429 " " 607,142 " 20X2 " 607,142 " " 71,429 " " 535,713 " 20X3 " 535,713 " " 71,429 " " 464,284 " 20X4 " 464,284 " " 71,429 " " 392,855 " 20X5 " 392,855 " " 71,429 " " 321,426 " 20X6 " 321,426 " " 71,429 " " 249,997 " 20X7 " 249,997 " " 71,429 " " 178,568 " 20X8 " 178,568 " " 71,429 " " 107,139 " 20X9 " 107,139 " " 71,429 " " 35,710 " 20Y0 " 35,710 " " 35,710 " - (a) "750,000 ÷ 10.5 = 71,429" ##### [715-30-55-101](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-101) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:26f3fb7fc44707d93e6e34676fc1b40c92dd843fdb5e15324c2e049b7fb62eeb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the guidance in paragraphs [715-30-35-18 through 35-27](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-18) applicable to gains and losses. This Subtopic provides for delayed recognition in net periodic pension cost of the effects of a number of types of events that change the measures of the projected benefit obligation and the fair value of plan assets. Those events include retroactive plan amendments and gains and losses. Gains and losses include the effects of changes in assumptions. ##### [715-30-55-102](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-102) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:5cc31fee18fd60cf468a90d4f87e06df23bc1de95573b3c621a19c1573f3fb9f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following Cases illustrate the accounting for different types of gains and losses: 1. a Liability loss (Case A) 2. b Asset gain (Case B) 3. c Asset loss and liability gain (Case C). ##### [715-30-55-103](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-103) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:f9a01c01d79c67b6f71f850818592996a996152a57658a1924823b65c9dbd924 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Each of the following Cases starts with an assumed beginning-of-the-year funded status and shows how a series of events changes the projected benefit obligation or the plan assets and how the effects of those events are recognized in the financial statements. Any change in the projected benefit obligation or the plan assets (other than contributions and benefit payments) either is initially recognized in other comprehensive income or is included in net periodic pension cost for the period. Employer contributions to a funded plan decrease a recognized pension liability or increase a recognized pension asset. Benefit payments from a funded plan reduce the pension obligation and the plan assets equally, with no effect on the employer's statement of financial position. ##### [715-30-55-104](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-104) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:e6095afadcb660d85fa60930b80adad8156c8423504d6967c546cd857e642583 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For simplicity, all illustrations ignore the effects of income taxes, and all contributions and benefit payments are assumed to occur on the last day of the year. Also, assumed discount rates and expected long-term rates of return are included for illustrative purposes only and are not meant to represent assumptions that would be appropriate at any given time. In all Cases, the service cost component is assumed as an input rather than calculated as part of the illustration. ##### [715-30-55-105](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-105) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:8fd0ce51f442d2a42c06fbb4b43182291a8a2da31c766dc3a3a3ec9097dc9499 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When Entity B's plan assets and obligations were measured at December 31, 20X1, the amount of the projected benefit obligation was not equal to the expected amount. Because the discount rate had declined to 9 percent and for various other reasons not specifically identified, the projected benefit obligation was higher than had been projected (a loss had occurred). The results were as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-0CDEDAD3-EC9C-4643-A66A-0D1F6106719E-low.gif) Projected for 20X1 Actual for 20X1 and Projected for 20X2 Assumptions: Discount rate 10.00% 9.00% Expected long-term rate of return on plan assets 10.00% 10.00% Average remaining service 10 years 10 years - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-9A39555D-D204-42FE-B1CD-0F327BE5A47C-low.gif) Actual 12/31/X0 For 20X1 Projected 12/31/X1 Actual 12/31/X1 For 20X2 Projected 12/31/X2 (Amounts in thousands) Projected benefit obligation " $(1,000)" " $(1,060)" " $(1,200)" " $(1,266)" (a) Plan assets at fair value 800 880 880 968 (b) Funded status and recognized liability $(200) $(180) $(320) $(298) Amounts recognized in accumulated other comprehensive income: Transition obligation $200 $180 $180 $160 Prior service cost - - - - Net (gain) or loss - - 140 138 $200 $180 $320 $298 Service cost component $60 $72 Interest cost component 100 108 Expected return on assets (80) (88) Market-related value of assets $800 $880 "Actual return on assets— (increase) decrease" (80) Amortization of: Transition obligation 20 20 Prior service cost - - Net (gain) or loss - (c) 2 (c) Net periodic pension cost $100 $114 Contribution $100 $114 Benefits paid $100 $114 (a) "(Actual projected benefit obligation at December 31, 20X1) + (service component) + (interest component) − (benefits paid)." (b) "(Actual plan assets at December 31, 20X1) + (expected return on assets) + (contributions) − (benefits paid)." (c) The minimum amortization of the net gain or loss included in beginning accumulated other comprehensive income (see paragraph 715-30-35-24) is calculated as follows. 20X1 20X2 Net (gain) or loss included in beginning accumulated other comprehensive income $- $140 Plus asset gain or less asset loss not yet in market-related value of assets at 1/1--(fair value of plan assets) - (market-related value of plan assets) - - Net (gain) or loss included in beginning accumulated other comprehensive income subject to amortization - 140 Corridor = 10% of the greater of projected benefit obligation or market-related value of assets at 1/1 100 120 Net (gain) or loss included in beginning accumulated other comprehensive income outside corridor - 20 x 1/average remaining service 0.10 0.10 Amortization recognized in net periodic pension cost $- $2 ##### [715-30-55-106](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-106) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:b446d0d8e580513b2f3b266a09c3fc097366a5df90788dda25a43049d800836a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When Entity B's plan assets and obligations were measured at December 31, 20X2, the amount of plan assets was not equal to the expected amount because of market performance better than the expected or assumed 10 percent. The results were as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-BE2163DE-1C74-4196-9A33-081C005B1793-low.gif) Projected for 20X2 Actual for 20X2 and Projected for 20X3 Assumptions: Discount rate 9.00% 9.00% Expected long-term rate of return on plan assets 10.00% 10.00% Average remaining service 10 years 10 years - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-D2BF5C2A-7AF9-44AD-AEE0-CA035D428380-low.gif) Actual 12/31/X1 For 20X2 Projected 12/31/X2 Actual 12/31/X2 For 20X3 Projected 12/31/X3 (Amounts in thousands) Projected benefit obligation " $(1,200)" " $(1,266)" " $(1,266)" " $(1,345)" Plan assets at fair value 880 968 " 1,068 " " 1,167 " Funded status and recognized liability $(320) $(298) $(198) $(178) Amounts recognized in accumulated other comprehensive income: Transition obligation $180 $160 $160 $140 Prior service cost - - - - Net (gain) or loss 140 138 38 38 $320 $298 $198 $178 Service cost component $72 $76 Interest cost component 108 114 Expected return on assets (88) (99) (a) Market-related value of assets $880 $988 (b) Actual return on assets—(increase) decrease (80) (188) Amortization of: Transition obligation 20 20 Prior service cost - - Net (gain) or loss 2 (c) - (c) Net periodic pension cost $114 $111 Contribution $114 $111 Benefits paid $114 $111 (a) "Expected return on plan assets = (expected long-term rate of return on plan assets) × (market-related value of plan assets). If contributions occurred other than at the end of the year, market-related value would consider those amounts." (b) Market-related asset values may be calculated in a variety of ways. This Case uses an approach that adds in 20 percent of each of the last 5 years' gains and losses. The only objective of the market-related calculation is to reduce the volatility of net periodic pension cost. Market-related value of assets at 1/1 $880 Expected return on assets 88 Contributions 114 Benefits paid (114) 20% of last five years' asset gains and (losses) 20 Market-related value of assets at 12/31 $988 (c) The minimum amortization of the net gain or loss included in beginning accumulated other comprehensive income (see paragraph 715-30-35-24) is calculated as follows. 20X2 20X3 Net (gain) or loss included in beginning accumulated other comprehensive income $140 $38 Plus asset gain or less asset loss not yet in market-related value of assets at 1/1--(fair value of plan assets) - (market-related value of plan assets) - 80 Net (gain) or loss included in beginning accumulated other comprehensive income subject to amortization 140 118 Corridor = 10% of the greater of projected benefit obligation or market-related value of assets at 1/1 120 127 Net (gain) or loss included in beginning accumulated other comprehensive income outside corridor 20 - x 1/average remaining service 0.10 0.10 Amortization recognized in net periodic pension cost $2 $- ##### [715-30-55-107](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-107) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:39f82d1a86c1474416edfd228fe3988aa3ceba94781f4c2a0155e32fae97bb4b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When Entity B's plan assets and obligations were measured at December 31, 20X3, both an asset loss and a liability gain were discovered. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-E73E17E5-634F-4B68-BF6D-C073F33DAEBC-low.gif) Projected for 20X3 Actual for 20X3 and Projected for 20X4 Assumptions: Discount rate 9.00% 9.25% Expected long-term rate of return on plan assets 10.00% 10.00% Average remaining service 10 years 10 years - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-04C128BB-010F-4476-9191-D4DF2268A62A-low.gif) Actual 12/31/X2 For 20X3 Projected 12/31/X3 Actual 12/31/X3 For 20X4 Projected 12/31/X4 (Amounts in thousands) Projected benefit obligation " $(1,266)" " $(1,345)" " $(1,320)" " $(1,409)" Plan assets at fair value " 1,068 " " 1,167 " " 1,097 " " 1,206 " Funded status and recognized liability (198) (178) (223) (203) Amounts recognized in accumulated other comprehensive income: Transition obligation 160 140 140 120 Prior service cost - - - - Net (gain) or loss 38 38 83 83 $198 $178 $223 $203 Service cost component $76 $79 Interest cost component 114 122 Expected return on assets (99) (109) Market-related value of assets $988 " $1,093 " (a) Actual return on assets—(increase) decrease (188) (29) Amortization of: Transition obligation 20 20 Prior service cost - - Net (gain) or loss - (b) - (b) Net periodic pension cost $111 $112 Contribution $111 $112 Benefits paid $111 $112 (a) Market-related asset values may be calculated in a variety of ways. This Case uses an approach that adds in 20 percent of each of the last 5 years' gains and losses. The only objective of the market-related calculation is to reduce the volatility of net periodic pension cost. Market-related value of assets at 1/1 $988 Expected return on assets 99 Contributions 111 Benefits paid (111) 20% of last five years' asset gains and (losses) = .20 (100 - 70) 6 Market-related value of assets at 12/31 " $1,093 " (b) The minimum amortization of the net gain or loss included in beginning accumulated other comprehensive income (see paragraph 715-30-35-24) is calculated as follows. 20X3 20X4 Net (gain) or loss included in beginning accumulated other comprehensive income $38 $83 Plus asset gain or less asset loss not yet in market-related value of assets at 1/1— (fair value of plan assets) - (market-related value of plan assets) 80 4 Net (gain) or loss included in beginning accumulated other comprehensive income subject to amortization 118 87 Corridor = 10% of the greater of projected benefit obligation or market-related value of assets at 1/1 127 132 Net (gain) or loss included in beginning accumulated other comprehensive income outside corridor x 1/average remaining service - - 0.10 0.10 Amortization recognized in net periodic pension cost $- $- ##### [715-30-55-108](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-108) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:31d9f38e76efc65064437aa4c12bc1f02d292d7ec8437afdb1b282525ff87034 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the determination of benefits for a pension plan with a flat-benefit and a pay-related formula following the guidance in paragraphs [715-30-55-11 through 55-12](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-11) . ##### [715-30-55-109](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-109) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:407d3730f4373b74a1b92079afe405aecbbf17f6256b35027473a9c915f65868 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following Cases illustrate different assumed service periods: 1. a 30-year assumed service period (Case A) 2. b 20-year assumed service period (Case B) 3. c 40-year assumed service period (Case C). ##### [715-30-55-110](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-110) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:faf64c2e626e94d23f7e27c7d3dcacb1650e85ab36fc9bd860237b563efd9c49 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Cases A, B, and C share the following assumptions. An employer has a pension plan that provides a pension benefit that is the greater of two formulas. Formula A provides a flat benefit of $450 for each of the first 20 years of an employee's service, but no additional benefits are earned for years of service beyond 20 years; Formula B provides a benefit equal to 1 percent of final pay for each year of service. It is assumed that an employee starts at a salary of $11,000 in Year 1 and receives a $1,000 increase in salary for each year of service. To simplify the illustration, the actuarial present values of the accumulated benefit obligation and projected benefit obligation have not been determined. Rather, those obligations are expressed in terms of the annual pension benefits that begin when the employee retires. ##### [715-30-55-111](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-111) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:f325ed9a2102fe91bdba506be20824f520cbebbd8e734279662f0e0cd3f6483a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In this Case, it is assumed that an employee will retire at the end of Year 30 with a final salary of $40,000. For that employee, Formula A provides an annual pension benefit of $9,000 for 30 years of service ($450 for each of the first 20 years of service and no additional benefits for Years 21-30); Formula B provides an annual pension benefit of $12,000 for 30 years of service (30 x 1% x $40,000 or $400 for each year of service). The attribution of pension benefits to years of service for Formulas A and B is presented in the following table. - Chart I - Attribution - Formula A versus Formula B - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-855F61B3-AC07-4529-8F3F-F28BE982D226-low.gif) ##### [715-30-55-112](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-112) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:a7d5eadef78a0246ab0481a2c4ca7bd858114316c1ee72a725903100c022c4c0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table shows the increase in accumulated and projected benefits for each year of service for the employee under Formulas A and B. As can be seen, Formula A provides a greater accumulated and projected benefit for Years 1-20. In the following table and the table in paragraph [715-30-55-114](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-114), ABO depicts the accumulated benefit obligation and PBO depicts the projected benefit obligation. - Chart II - Accumulated and Projected Benefit Obligation - Formula A versus Formula B - ![](https://asc.understandingaccounting.org/asc-img/GUID-2FA29C7C-25FE-4913-B882-A14269123C99-low.gif) ##### [715-30-55-113](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-113) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:7620a1782a330f7dbad3d5ae828cd0a5ca0c90f368f06550c113feb076656996 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Beginning in Year 21, no additional pension benefits are provided under Formula A. At that point, Formula B begins to provide a portion of the total projected benefit attributed to Years 21-30. The additional pension benefit expected to be provided under Formula B for service in Years 21-30 is $3,000 ($9,000 accumulated benefit at Year 20 under Formula A as compared with $12,000 accumulated benefit at Year 30 under Formula B); that additional pension benefit is attributed to service ratably over Years 21-30 ($300 per year). Note that although no additional pension benefits are earned in Years 21 and 22 (see projected benefit obligation in the preceding table) because the projected benefit under Formula B in those years is less than $9,000, pension benefits are attributed to those years of service based on the total incremental pension benefit for Years 21-30. Attribution of total projected benefits to years of service is illustrated in the following table. - Chart III - Attribution of Benefits over Service - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-58B71389-CB93-436F-92FD-75A55584B285-low.gif) ##### [715-30-55-114](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-114) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:64a2b2ba38b0242862436acaf7c4db6f2f23ea4220bf69dada4a3d54ad408cbc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Thus, while the accumulated benefit obligation at any point in time represents the greater of the pension benefits determined under Formulas A and B, the projected benefit obligation is determined on the basis of the formula providing the greater pension benefit (Formula A) until an allocation of incremental pension benefits for the remaining service period using another formula provides a greater pension benefit allocated to service in the current year. In this Case, the allocation of $3,000 of incremental benefits to Years 21-30 under Formula B provides a greater benefit allocated to service in those years ($300 per year) than Formula A would allocate ($0). The following table presents the increase in the accumulated benefit obligation and projected benefit obligation when the plan benefits are the greater of those determined under Formulas A and B. - Chart IV - Accumulated and Projected Benefit Obligation - Greater of Benefit under Formulas A and B - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-55EE9B14-3B4F-47A5-98D1-4C125CB9C6C3-low.gif) ##### [715-30-55-115](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-115) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:cafa239a28b674d2fc63151bee75f3736a9c12f35c68d86ebda0a60446bd6439 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The accumulated and projected benefit obligation for Years 1-30 are as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-87BA01F4-FA4B-434C-8E60-0E010A384E51-low.gif) Year Accumulated Benefit Obligation Projected Benefit Obligation 1-19 (a) (a) 20 " $9,000 " (a) " $9,000 " (a) 21 " 9,000 " (a) " 9,300 " (b) 22 " 9,000 " (a) " 9,600 " (b) 23 " 9,000 " (a) " 9,900 " (b) 24 " 9,000 " (a) " 10,200 " (b) 25 " 9,000 " (a) " 10,500 " (b) 26 " 9,360 " (c) " 10,800 " (b) 27 " 9,990 " (c) " 11,100 " (b) 28 " 10,640 " (c) " 11,400 " (b) 29 " 11,310 " (c) " 11,700 " (b) 30 " 12,000 " (c) " 12,000 " (b) (a) "$450 × years of service, not to exceed 20 years (Formula A)." (b) Formula A benefits earned through Year 20 plus attribution of additional projected benefits under Formula B (for 21-30 years of service) in proportion to the number of completed years of service to the number of years of service that are expected to be completed for the period during which Formula B is applied. (c) One percent of salary for the year noted for each year of service already rendered (Formula B). ##### [715-30-55-116](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-116) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:21937300d53eb6d3d96381a4995201c3522afffb2c66f816e7be4a7de6bf7ef9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In this Case, it is assumed that an employee will retire at the end of Year 20 with a final salary of $30,000. For that employee, Formula A provides an annual pension benefit of $9,000 ($450 for each year of service); Formula B provides an annual pension benefit of $6,000 (20 x 1% x $30,000 or $300 for each year of service). Since Formula A provides the greater benefit in each year, attribution will be determined under Formula A. The accumulated benefit obligation and projected benefit obligation will be equal in Years 1-20 since Formula A is not pay-related. ##### [715-30-55-117](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-117) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:450906e35745458628ae24000e141e9ecad8ac7c12a8e8a643f2c68649a87c56 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In this Case, it is assumed than an employee will retire at the end of Year 40 with a final salary of $50,000. For that employee, Formula A provides an annual pension benefit of $9,000 for 40 years of service ($450 for each of the first 20 years of service and no additional benefits for service in Years 21-40); Formula B provides an annual pension benefit payable at retirement of $20,000 for 40 years of service (40 x 1% x $50,000 or $500 for each year of service). Since Formula B provides the greater pension benefit in each year, attribution of the projected benefit obligation will be determined under Formula B for all years of service. The accumulated benefit obligation, however, continues to be determined for each year of service by the formula that provides the greater accumulated benefit. ##### [715-30-55-118](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-118) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:2442322112dd0028ec32acf54aa15052c73bacab5bbe2e2b52fd5a3159d5ddf6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the guidance in paragraph [715-30-55-14](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-14) relating to attribution of pension benefits to a qualified and to an excess benefit pension plan. ##### [715-30-55-119](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-119) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:dcedd5a302e4a31d7890eea15dde4549bf8c109ddac6f021c2fda2f1f57aa1a8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In this Example, a pension plan's formula is an annual pension benefit of 2 percent of final pay for each year of service. It is assumed than an employee starts at a salary of $200,000 in Year 1, receives annual salary increases of $15,000, and retires at the end of 21 years at a salary of $500,000. It is further assumed that the limitation imposed by the tax law for annual pension benefit payments is $90,000 in Year 1 and that the limitation under the existing law will increase to permit annual pension benefit payments of $120,000 for all the years the employee will receive benefit payments. ##### [715-30-55-120](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-120) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:1a1a691b3e33c33c6b74191880097165fcfed81b9e9d21ea29c490a49ab0f31b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Attribution of the accumulated benefit obligation and projected benefit obligation for the employee is as follows. To simplify the illustration, the actuarial present values of the accumulated and projected benefit obligation have not been determined. Rather, those obligations are expressed in terms of the annual pension benefits that begin when the employee retires. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-5FB40D67-AECD-460E-A985-5CF2016BB02D-low.gif) Total Qualified Pension Plan Excess Benefit Pension Plan Year of Service Salary Accumulated Benefit Obligation Projected Benefit Obligation Accumulated Benefit Obligation Projected Benefit Obligation Accumulated Benefit Obligation Projected Benefit Obligation 1 " $200,000 " " $4,000 " " $10,000 " " $4,000 " " $10,000 " 2 " 215,000 " " 8,600 " " 20,000 " " 8,600 " " 20,000 " 3 " 230,000 " " 13,800 " " 30,000 " " 13,800 " " 30,000 " 4 " 245,000 " " 19,600 " " 40,000 " " 19,600 " " 40,000 " 5 " 260,000 " " 26,000 " " 50,000 " " 26,000 " " 50,000 " 6 " 275,000 " " 33,000 " " 60,000 " " 33,000 " " 60,000 " 7 " 290,000 " " 40,600 " " 70,000 " " 40,600 " " 70,000 " 8 " 305,000 " " 48,800 " " 80,000 " " 48,800 " " 80,000 " 9 " 320,000 " " 57,600 " " 90,000 " " 57,600 " " 90,000 " 10 " 335,000 " " 67,000 " " 100,000 " " 67,000 " " 100,000 " 11 " 350,000 " " 77,000 " " 110,000 " " 77,000 " " 110,000 " 12 " 365,000 " " 87,600 " " 120,000 " " 87,600 " " 120,000 " 13 " 380,000 " " 98,800 " " 130,000 " " 98,800 " " 120,000 " " $10,000 " 14 " 395,000 " " 110,600 " " 140,000 " " 110,600 " " 120,000 " " 20,000 " 15 " 410,000 " " 123,000 " " 150,000 " " 120,000 " " 120,000 " " $3,000 " " 30,000 " 16 " 425,000 " " 136,000 " " 160,000 " " 120,000 " " 120,000 " " 16,000 " " 40,000 " 17 " 440,000 " " 149,600 " " 170,000 " " 120,000 " " 120,000 " " 29,600 " " 50,000 " 18 " 455,000 " " 163,800 " " 180,000 " " 120,000 " " 120,000 " " 43,800 " " 60,000 " 19 " 470,000 " " 178,600 " " 190,000 " " 120,000 " " 120,000 " " 58,600 " " 70,000 " 20 " 485,000 " " 194,000 " " 200,000 " " 120,000 " " 120,000 " " 74,000 " " 80,000 " 21 " 500,000 " " 210,000 " " 210,000 " " 120,000 " " 120,000 " " 90,000 " " 90,000 " ##### [715-30-55-121](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-121) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:eee0e2238d943f5779710e22a21ef357e81a95e80b92e4ae54f12d21854dd990 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the guidance in paragraphs [715-30-55-69 through 55-78](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-69) relating to a transfer to the Japanese government of the substitutional portion of employee pension fund liabilities. - ![](https://asc.understandingaccounting.org/asc-img/GUID-B8167136-DE5B-4ADE-8D1C-D171CE7B246B-low.gif) Total Employees Pension Fund Before Separation(a) Effect of Separation After Separation Accumulated benefit obligation " $(10,500)" " $5,000 " (b) " $(5,500)" Effects of projected future wage levels " (1,600)" 750 (c) (850) Projected benefit obligation " (12,100)" " 5,750 " " (6,350)" Plan assets at fair value " 6,420 " " (3,000)" (d) " 3,420 " Funded status " (5,680)" " 2,750 " (e) " (2,930)" Changes in plan assets and benefit obligations recognized in accumulated other comprehensive income: Transition obligation 50 - 50 Prior service cost (credit) (540) - (540) Net (gain) loss " 4,405 " " (1,941)" (f) " 2,464 " Total amount recognized in accumulated other comprehensive income " $(3,915)" " $1,941 " " $(1,974)" (a) Employee Pension Fund assets and obligations would be remeasured at fair value immediately before the separation transaction. (b) Assumed value of substitutional accumulated benefit obligation for purposes of illustration. (c) Assumed value of future salary levels (salary progression) related to substitutional benefit obligation at time of settlement for purposes of this Example. (d) Assumed value of assets required to be transferred to the government pursuant to the government formula for purposes of this Example. (e) "Difference between the fair value of the obligation "settled" with the government and the assets required to be transferred to the government. That amount, less the effect of the reversal of future salary progression ($750), is the government subsidy that shall be separately accounted for and disclosed." (f) "Calculated as the ratio of the obligation settled ($5,000) to the total Employees' Pension Fund obligation immediately before settlement ($11,350), both of which exclude the effect of future salary progression related to the substitutional portion, times the net gain or loss included in accumulated other comprehensive income immediately before settlement." ##### [715-30-55-122](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-122) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:f941a49a76e772e8e91d528ae918b6ffd5004381ecb0dad5bd63c763a8bd59f9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the guidance in paragraph [715-30-55-88](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-88) on the combination of two plans. ##### [715-30-55-123](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-123) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:6cc6300a93a555d985b79ba334d785ebf81614acf0afe696541c3c7b818143c5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In this Example, an employer has two pension plans (Plan A and Plan B) that are combined at December 31, 20X0. The following shows the assumptions and methods of amortizing pension amounts initially recognized in other comprehensive income and the funded status of each pension plan immediately before and after the combination of Plan A and Plan B. - December 31, 20X0—Before Combination of Plan A and Plan B - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-5BFD01F7-7A0B-48E8-91BD-CA88BD9E2D18-low.gif) Plan A Plan B Assumptions: Weighted-average discount rate 10% 9.25% Expected long-term rate of return on plan assets 10% 10% Average remaining service period 17 years 15 years "Number of employees as of December 31, 20X0 expected to receive benefits under the pension plan" 300 420 Amortization method: Prior service cost Straight-line amortization over average remaining service period of employees expected to receive benefits (17 years) Straight-line amortization over average remaining service period of employees expected to receive benefits (15 years) - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-2479F3CD-ECA6-4A4E-B069-9F237F8ABEF4-low.gif) Plan A Plan B Projected benefit obligation $(502) $(640) Plan assets at fair value 804 205 Funded status and recognized asset (liability) $302 $(435) Amounts recognized in accumulated other comprehensive income: Net (gain) loss $(114) $41 Prior service cost (credit) 120 321 $6 $362 - December 31, 20X0—After Combination of Plan A and Plan B - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-BEE15F40-DC89-42B5-AF2F-D24029B3908D-low.gif) Combined Plan AB Assumptions: Weighted-average discount rate 9.6% (a) Expected long-term rate of return on plan assets 10% (b) Average remaining service period 15.8 years (c) "Number of employees as of December 31, 20X0 expected to receive benefits under the pension plan" 720 Amortization method: Prior service cost The existing prior service costs continue to be amortized on the bases applied before the combination Net gain or loss Minimum amortization specified in paragraph 715-30-55-50 (average remaining service period is 15.8 years)(c) Projected benefit obligation " $(1,142)" Plan assets at fair value " 1,009 " Funded status and recognized asset (liability) $(133) Amounts recognized in accumulated other comprehensive income: Net (gain) loss $(73) Prior service (credit) cost 441 $368 (a) "The weighted-average assumed discount rate reflects the rates at which the combined pension benefits could be effectively settled. (For purposes of this Example, 9.6 percent is presumed to be the appropriate rate. It was not actually calculated using any of the data for the previously separate plans.)" (b) The expected long-term rate of return on plan assets does not change because both pension plans used the same rate. (c) The average remaining service period of employees expected to receive benefits under the pension plan is weighted by the number of covered employees from each group as follows: (17 years × 300 ÷ 720) + (15 years × 420 ÷ 720) = 15.8 years (rounded). That should be the same period that would be determined by a new calculation for the combined group. ##### [715-30-55-124](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-124) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:6ce62952518c23dcd588206dad0672829e56c4b425974910bbf504b8654c1c37 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the guidance in paragraph [715-30-55-90](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-90) relating to the division of one pension plan into separate pension plans. ##### [715-30-55-125](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-125) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:2bbcac870a82bd37beb4967c9e263833d2061ea57948bb83714983f7d5c64ebb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In this Example, an employer has a pension plan that covers employees of the parent entity and its consolidated subsidiaries (Subsidiaries B and C). The employer divides its pension plan into three separate pension plans (Plan A, Plan B, and Plan C) that are sponsored by the parent entity and Subsidiaries B and C, respectively. ##### [715-30-55-126](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-126) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:4b636543c6363a32e2b7c48d517110806025c28bb443f8157d858462e31becf6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following shows the funded status of the pension plans immediately before and after the division. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-EBBC2D5E-EF7C-4760-BE19-6BF1EAA76BCE-low.gif) Before Division After Division "(Parent) Plan ABC" (Parent) Plan A (Subsidiary B) Plan B (Subsidiary C) Plan C Projected benefit obligation " $(90,000)" " $(54,000)" (a) " $(18,000)" (a) " $(18,000)" (a) Plan assets at fair value " 160,000 " " 132,000 " (b) " 15,000 " (b) " 13,000 " (b) Funded status and recognized asset (liability) " $70,000 " " $78,000 " " $(3,000)" " $(5,000)" Amounts recognized in accumulated other comprehensive income: Net gain " $(55,000)" " $(33,000)" (c) " $(11,000)" (c) " $(11,000)" (c) Prior service cost " 25,000 " " 17,500 " (d) " 5,000 " (d) " 2,500 " (d) Transition asset " (40,000)" " (24,000)" (c) " (8,000)" (c) " (8,000)" (c) " $(70,000)" " $(39,500)" " $(14,000)" " $(16,500)" (a) Allocation based on individual employees covered by each plan. (b) Allocation determined by employer. (Example presumes that no regulatory requirements apply.) (c) "Allocation based on percent of total projected benefit obligation ($90,000) assumed by each pension plan. For Plans A, B, and C, that is 60 percent, 20 percent, and 20 percent, respectively." (d) Allocation based on applicable individual employees covered by each plan. (Example presumes prior service cost not allocable on the same percentage basis as projected benefit obligation assumed by each pension plan.) ##### [715-30-55-127](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-127) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:d544557b0c774c09242f44990e87097b5d04560f239a154b67164b859b7aabd6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The journal entries to account for the division of the pension plan follow. - Parent Entity - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-B3C8E5A0-D1B2-44E9-BC67-6B70B4B54CB2-low.gif) Pension asset " $8,000 " Accumulated other comprehensive income " 30,500 " Investment in Subsidiary B " $17,000 " Investment in Subsidiary C " 21,500 " - To record the transfer of pension assets, obligations, and amounts included in accumulated other comprehensive income from the parent entity to Subsidiaries B and C. - Subsidiary B - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-32782210-9BBA-4C5E-B427-554CF4E5C238-low.gif) Stockholder's equity (a) " $17,000 " Pension liability " $3,000 " Accumulated other comprehensive income " 14,000 " (a) The accounting within the equity section is not addressed in this Example. - To record the receipt of pension assets, obligations, and amounts included in accumulated other comprehensive income from the parent entity. - Subsidiary C - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-9AB6416E-2485-4CC0-97C4-390F2463385D-low.gif) Stockholder's equity (a) " $21,500 " Pension liability " $5,000 " Accumulated other comprehensive income " 16,500 " (a) The accounting within the equity section is not addressed in this Example. - To record the receipt of pension assets, obligations, and amounts included in accumulated other comprehensive income from the parent entity. ##### [715-30-55-127A](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-127A) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:791fbdaa4a7d50dff65edff2bb8a0423e5600f4a0b1d7adc122652de133192ec Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For the purposes of this Example, a cash balance plan has the following characteristics: 1. a A defined principal-crediting rate as a percentage of salary 2. b A defined, noncontingent interest-crediting rate that entitles participants to future interest credits at a stated, fixed rate until retirement. The benefit promise in a cash balance arrangement for a cash balance plan as described in (a) through (b) is not pay-related, and use of a projected unit credit method is neither required nor appropriate for purposes of measuring the benefit obligation and annual cost of benefits earned under this Subtopic. The appropriate cost attribution approach, therefore, is the traditional unit credit method. See paragraphs [715-30-35-36 through 35-39](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-36) and [715-30-55-7 through 55-15](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-7) for guidance on attribution approaches. ### Settlements, Curtailments, and Certain Termination Benefits ##### [715-30-55-128](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-128) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:d49adcda5e35e29823a224118ea9e7602272f74bee5f957d186fa29bd520172e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subsection is an integral part of the requirements of this Subtopic. This Subsection provides additional guidance and illustrations that address the application of accounting requirements to specific aspects of accounting for matters related to [settlements](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."), [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 certain termination [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.") related to defined benefit pension plans. The guidance and illustrations that follow may be based on provisions of law that are subject to change. These assumptions about the law are for illustrative purposes only. #### Implementation Guidance ##### [715-30-55-129](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-129) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:7946b0a09456762c13bd570a595ce51582a7b83ba55722d9eca3b60e6c053da5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This implementation guidance is organized in the following categories: 1. a Relationship of settlements and curtailments to other events 2. b Settlements 3. c Curtailments 4. d Certain termination benefits 5. e Presentation matters. ##### [715-30-55-130](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-130) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:6cf75ee1b710566862decdea79e9beea9cab670d536b884ae07a330a42a94b27 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [715-30-35-74 through 35-78](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-74) establish general guidance on the relationship of settlements and curtailments to other events. That guidance is affected by whether there is a successor pension plan. A new pension plan that is established by an employer, or one or more existing pension plans that are amended by the employer, to provide for the accrual of defined [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.") for the future services of present employees that were previously covered by another pension plan (old plan) sponsored by that employer shall be considered a successor pension plan except under any of the following conditions: 1. a The new plan's pension [benefit formula](https://asc.understandingaccounting.org/glossary/b/#benefit-formula "See Pension Benefit Formula.") or the amendment or amendments to the existing pension plan(s) provide for accrual of only insignificant defined pension benefits for those employees. 2. b The new or existing pension plan or plans cover only an insignificant number of employees previously covered by the old plan. ##### [715-30-55-131](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-131) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:9dd31a007e8ecd1a4a1be16621e1a4a97f58e1db9ddc2d5fca6e28a5421c13d1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Settlements, Curtailments, and Certain Termination Benefits Subsections of this Subtopic does not apply to an employer's withdrawal from a multiemployer pension plan, and, therefore, if the employer withdraws from a multiemployer pension plan and establishes a pension plan for its employees, that pension plan is not considered to be a successor pension plan. ##### [715-30-55-132](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-132) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:e6e8a48f942fd023ee753d280d291041f99c3d332c70f4caae85f2e5bcc01228 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An employer may terminate its pension plan, settle a pension benefit obligation, withdraw excess [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 establish a successor pension plan that has the same pension benefit formula. In this situation, a settlement occurs but a curtailment does not. Although employees no longer accrue pension benefits under the terminated pension plan, they do accrue pension benefits under the successor pension plan. From an accounting viewpoint, those two pension plans are viewed as one pension plan because, in substance, the pension plan has not been terminated. The only transactions requiring accounting recognition in the employer's financial statements are the settlement and the withdrawal of excess plan assets. See paragraphs [715-30-35-74 through 35-78](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-74) for guidance on whether a settlement or curtailment has occurred if defined benefits continue to be provided for future services. If the successor pension plan provides (reduced) increased pension benefits for all years of employees' 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."), that change in the benefit formula is accounted for as a (negative) pension [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."). See paragraph [715-30-55-54](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-54) for guidance on negative plan amendments. ##### [715-30-55-133](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-133) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:540095ab8df9fd3dfd744ddabbf067f4bd5a961eeda185b4187c61590ac1808b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A settlement of the pension benefit obligation as part of a pension [plan termination](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.") (with no successor pension plan) may occur in a financial reporting period that differs from the period in which the effects of the curtailment resulting from the pension plan termination ordinarily would be recognized. The effects of the settlement and the effects of the curtailment that result from a pension plan termination shall be recognized in accordance with paragraphs [715-30-35-79 through 35-82](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-79) and [715-30-35-92 through 35-94](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-92) , respectively, which may result in the effects of those events being recognized in different periods. See Example 8 (paragraph [715-30-55-236](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-236)) for an illustration of a termination and a settlement recognized in different periods. ##### [715-30-55-134](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-134) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:34bc088e296e4f6efe967b063526f7458ac7a7882913fd916b36000da9ae4bbe Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If an employer's disposal of a component of an entity (see paragraph [715-30-55-193](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-193)) results in a termination of some employees' services earlier than expected but does not significantly reduce the expected years of future service of present employees covered by the pension plan, the effects of the reduction in the work force on the pension plan should be measured in the same manner as a curtailment (see paragraphs [715-30-35-92 through 35-93](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-92) ) to determine the gain or loss on the disposal pursuant to paragraph [205-20-45-3](https://asc.understandingaccounting.org/asc/205/20/#205-20-45-3). Although the reduction in the work force does not result in a significant reduction in the expected years of future service of present employees covered by the pension plan and, therefore, a curtailment does not occur, measuring the effects of the reduction in the work force in the same manner as a curtailment (see paragraphs [715-30-35-92 through 35-93](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-92) ) is appropriate for purposes of determining the gain or loss on the disposal. ##### [715-30-55-135](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-135) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:34d2f94baa64287c5afc95a7a3a1742166faa62df401df87259adbd5b1c69ad3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As part of the sale of a component of an entity there may be a transfer of a pension benefit obligation to the purchaser (that is, the purchaser assumes the pension benefit obligation for specific employees. Whether both a settlement and a curtailment occur depends on the facts and circumstances. ##### [715-30-55-136](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-136) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:0822419aa4907693ee28f5be4a4d45339b57020a67a7e6e188db858b2dc17e93 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A settlement occurs if the criteria in the definition of the term [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.") are satisfied. If there is any reasonable doubt that the purchaser will meet the pension benefit obligation assumed under the sales agreement and the seller remains contingently liable for that pension benefit obligation, a settlement does not occur. ##### [715-30-55-137](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-137) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:37424f4beebd82ae0af94962b12f7f62bea1971763643ac9227db1d4cb7edef1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A curtailment occurs if the sale significantly reduces the expected years of future service of present employees covered by the employer's pension plan. Even if a curtailment does not occur, the effects of the reduction in the work force should be considered for purposes of determining the gain or loss on the sale. ##### [715-30-55-138](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-138) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:235f3c5f682347c04938c16f585a992a2e8f2963a4bc77f0d11284e3e8f2bbbf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [715-60-55-111](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-111) for a discussion of the interaction of the termination of a postretirement plan with a related increase in an employer's obligation for pension benefits. ##### [715-30-55-139](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-139) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:886920296689e4d87543b0ad481ae566c8350cdb0809c5dae2971fddf7fc5005 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Settlement, Curtailments, and Special Terminations Subsection of Section 715-30-35 provides the general guidance on settlement transactions. The following settlement related implementation guidance is organized in three categories: 1. a Meeting the criteria for settlement 2. b Settlement measurement issues 3. c Application of accounting policy. ##### [715-30-55-140](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-140) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:c7680205cbece0433d34538a660be85591a12bd5d9b990d518b21bf155e0b0cb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A transaction that does not meet all of the criteria in the definition of the term [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.") does not constitute a settlement for purposes of applying the guidance in the Settlement, Curtailment, and Certain Termination Benefits Subsections of this Subtopic. One of the criteria is that the transaction is irrevocable. In this context, irrevocable means that a transaction or event cannot be revoked, recalled, or undone; the transaction or event is unalterable. ##### [715-30-55-141](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-141) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:bb21fe3f4fac47b8404b64d95a56903f11d1cd52a6d392ec3dead30ad2cd2032 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For example, investing in a portfolio of high-quality fixed-income securities with principal and interest payment dates similar to the estimated payment dates of benefits may avoid or minimize certain risks. However, that does not constitute a settlement because the investment decision can be reversed and such a strategy does not relieve the employer or the plan of primary responsibility for a pension obligation, nor does it eliminate significant risks related to the obligation. ##### [715-30-55-142](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-142) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:5801871ddcb15ab9de8dadb18d265b8f92552b9c9ab7fbdb5f6349a3c55e62fe Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Another example of a transaction that does not meet the requirements for a settlement involves an employer with a situation in which all of the following occur in a period: 1. a The employer decides to terminate a pension plan and establish a successor pension plan. 2. b A [nonparticipating annuity contract](https://asc.understandingaccounting.org/glossary/n/#nonparticipating-annuity-contract "An annuity contract that does not provide for the purchaser to participate in the investment performance or in other experience of the insurance entity.") for the [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.") of all plan participants is purchased but can be rescinded if certain regulatory approvals for the termination of the pension plan are not obtained. 3. c It is determined that the regulatory approvals are probable. ##### [715-30-55-143](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-143) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:47552668566bf17984c0fd0a5545226b69c286d600cefc96b7c586f2d903dbeb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An employer shall not recognize a settlement gain or loss until all three criteria inherent in the definition of a settlement are satisfied. In the situation described in the preceding paragraph, an irrevocable action has not occurred that relieves the employer or the pension plan of primary responsibility for a pension benefit obligation and eliminates significant risks related to the pension benefit obligation and the plan assets used to effect the settlement. Therefore, recognition of a settlement gain or loss should await completion of the irrevocable action necessary to relieve the employer or the pension plan of the primary responsibility for the pension benefit obligation. The probability of completion of the irrevocable action is not relevant. ##### [715-30-55-144](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-144) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:571eb7e2707e8a34dd15cdb99e7b3bd4a10d4b5c72c61e94443952b9ced00de8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Another example illustrating the need to meet the criteria inherent in the definition of a settlement is a situation in which an employer decides in 20X1 to terminate its pension plan, withdraw excess plan assets, and establish a successor pension plan, but is unable to effect the transactions, which include the settlement of the [vested benefit obligation](https://asc.understandingaccounting.org/glossary/v/#vested-benefit-obligation "The actuarial present value of vested benefits."), until regulatory approval is obtained. The purchase of nonparticipating annuity contracts occurs in January 20X2 after regulatory approval has been obtained and before the 20X1 financial statements have been issued or are available to be issued (as discussed in Section 855-10-25). A settlement gain or loss is not recognized until all three criteria for a settlement are satisfied. That does not occur until January 20X2. In this situation, adjustment of the 20X1 financial statements would not be appropriate, although disclosure of the event may be required. ##### [715-30-55-145](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-145) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:06dc0f852058d08293cc6d75df78d3bb4eb027e8eb6d13480c5c84ce13599013 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An employer may withdraw excess plan assets (cash) from a pension plan and not be required to settle a pension benefit obligation as part of an asset reversion transaction. Because a settlement has not occurred, none of the net gain or loss included in accumulated other comprehensive income shall be recognized in earnings. See paragraph [715-30-55-6](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-6) for guidance on the accounting required in this situation. ##### [715-30-55-146](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-146) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:0c8c86badfe7e4e2534aef4fd90355918a07f0f3ce65801244a5b21e20269ce6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If individual nonparticipating annuity contracts are to be used to settle a pension benefit obligation, payment of the premium for the purchase of the individual annuity contracts may be necessary before a settlement gain or loss should be recognized. The timing of the payment of the premium is relevant in assessing the critical issue, which is whether a transaction has occurred that irrevocably relieves the employer or the pension plan of primary responsibility for a pension benefit obligation and eliminates significant risks related to the pension benefit obligation and the plan assets used to effect the settlement. For a settlement gain or loss to be recognized, the insurance entity must have unconditionally undertaken a legal obligation to provide the specified pension benefits. If the premium has not been paid, the purchase of the annuity contracts may be revocable. Further, if plan assets have not been transferred by the pension plan to effect the settlement, they may be at risk. If significant risks related to the pension benefit obligation and the plan assets to be used to effect the settlement have not been eliminated, no gain or loss should be recognized. ##### [715-30-55-147](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-147) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:a09eb1a58e29a8db954636717976e1069147dacad0bddb01068387a7e5a6df81 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If individual nonparticipating annuity contracts are to be used to settle a pension benefit obligation, issuance of the individual annuity contracts may be necessary before a settlement gain or loss should be recognized. The issuance of individual annuity contracts is not the critical event but is relevant in assessing the critical issue, as stated in the preceding paragraph. However, the absence of individual annuity contracts together with an assessment of other relevant information, for example, payment of the premium as in the preceding paragraph, may indicate that only a commitment has been made to purchase annuity contracts. A commitment does not satisfy the criteria for a settlement and does not result in a settlement gain or loss. ##### [715-30-55-148](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-148) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:fd0c734b33d5ac0b536f17df1ce2f6fb29a77704d8ea4f79286f192d1813ad68 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If plan participants have agreed to accept lump-sum cash payments in exchange for their rights to receive specified pension benefits and the amounts of the payments have been fixed, payment of the cash to plan participants may be necessary before a settlement gain or loss should be recognized. As noted in paragraph [715-30-55-146](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-146), the timing of the payment is relevant in assessing whether the criteria for a settlement have been met. If the cash payments have not been made, the agreement may be revocable. Further, if plan assets have not been transferred by the pension plan to effect the settlement, they may be at risk. If significant risks related to the pension benefit obligation and the plan assets to be used to effect the settlement have not been eliminated, no gain or loss shall be recognized. ##### [715-30-55-149](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-149) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:571326877f2519c9e2ccacc21a35c3920cbd29d005d703efb77cec38fd5a1412 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A settlement does not occur if a contract is entered into with an insurance entity that requires the insurance entity to pay only a portion of specific participants' pension benefits, for example, payments due retirees for the next five years. The contract should provide life annuities, not limited-term annuities, for a settlement to occur. A contract for limited-term annuities does not eliminate significant risks related to the pension benefit obligation for the participants, for example, the duration of their pension benefit payments, and, therefore, it does not satisfy the criteria for a settlement. ##### [715-30-55-150](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-150) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:e04a59d15df12443a44471ecbe2c87d73eac8875e3b5ea76ba625362c40021e0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Another example of a transaction that does not constitute a settlement involves a situation in which all of the following occur: 1. a An employer (or the pension plan) irrevocably purchases an insurance contract that guarantees payment of those pension benefits vested as of the date of the purchase. 2. b The purchase price of the insurance contract significantly exceeds the purchase price of a nonparticipating annuity contract covering the same pension benefits. 3. c The insurance entity receives an annual fee based on a percentage of 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 the covered pension benefits to compensate it for the risk of guaranteeing those pension benefits. 4. d If a specified ratio of assets to the covered pension benefit obligation is maintained, the employer (or the pension plan) continues to manage the assets used to effect the purchase; however, the insurance contract requires that a certain percentage of the assets be invested in high-quality bonds or a dedicated bond portfolio, depending on the ratio of assets to the covered pension benefit obligation. 5. e Upon final satisfaction of all of the pension benefit obligation covered by the insurance contract and payment of all of the contract's administrative fees due to the insurance entity, the insurance entity will remit to the employer (or the pension plan) any amounts remaining in the insurance contract's account balance. Interim withdrawals from the account by the employer (or the pension plan) are also permitted with prior notification to the insurance entity unless a withdrawal causes the ratio of assets to the covered pension benefit obligation to drop below a specified percentage. ##### [715-30-55-151](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-151) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:ea360e8f1ed585f6dc03e1288bfae60437a558293f3ca21583271911bd4e2d6d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Under the terms of the contract described in the preceding paragraph, the employer remains subject to those risks and rewards described in paragraph [715-30-35-84](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-84). Accordingly, the insurance contract is 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.") that does not satisfy the criteria in paragraphs [715-30-35-84 through 35-88](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-84) for a settlement. ##### [715-30-55-152](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-152) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:7f4819c6fd46f95beabda150ac1826bbf04587689812a620d3b1b695bf80b543 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Delayed recognition of gains or losses in [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.") is permitted under the General Subsections of this Subtopic, because, in part, past gains or losses may be offset by future losses or gains. The Settlements, Curtailments, and Certain Termination Benefits Subsections of this Subtopic require recognition in earnings of gains or losses included in accumulated other comprehensive income when a settlement of a pension benefit obligation occurs because the basis for generating offsetting losses or gains has been altered, that is, a pension benefit obligation and the plan assets used to effect the settlement are eliminated. ##### [715-30-55-153](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-153) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:683c270e3cc0c3d13deac80cce7e27f3c76031e227ba96144c62cf386ec612f6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The transaction in paragraph [715-30-55-150](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-150) is structured so that the plan assets and the pension benefit obligation have substantially the same ability to generate gains (or losses to the extent of the purchase price for 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.") and the annual fees paid to the insurance entity for the guarantee of the pension benefit obligation) both before and after the insurance contract is purchased. The employer remains subject to significant risks and rewards related to the pension benefit obligation and the plan assets and, therefore, the purchase does not qualify for settlement accounting. That transaction creates, in substance, a deposit administration contract with a guarantee from the insurance entity to provide for certain pension benefits from the insurance entity's general assets, if necessary. Transactions such as those in this example are addressed in the paragraph [715-30-35-87](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-87) guidance that prohibits settlement accounting for those transactions for which the basis of generating offsetting losses or gains has not been substantially altered. ##### [715-30-55-154](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-154) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:40e1ba85a4bbb67b29843fec403dc83f7356e94672356ba36c1c142cd79389cf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [715-30-35-79](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-79) provides accounting guidance on the use of participating annuity contracts in settlement transactions. Under that guidance, settlement accounting is required for only certain participating annuity contracts as determined under the guidance in paragraphs [715-30-35-84 through 35-88](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-84) . ##### [715-30-55-155](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-155) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:f533b1ec6a61b97762aa4336bdfb737bc4dc5bd54e375bec4a3f017201e54c9f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. One reason for requiring settlement accounting for certain participating annuity contracts is to preclude a potential abuse. If settlement accounting was required for only nonparticipating annuity contracts, then an employer could avoid settlement accounting by purchasing what was essentially a nonparticipating annuity contract and paying a small premium for a de minimis participation right. ##### [715-30-55-156](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-156) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:e8e61a5873399c16b6ce3c7e303aca6316b832207ebb4ba63229c0f465e86d7d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Another reason is that paying a premium for a contract including a participation right rather than purchasing a nonparticipating annuity contract might be a sound economic decision that should not otherwise disqualify a transaction from settlement accounting, providing the transaction transferred the requisite level of risks and rewards from the employer to the insurance entity. However, if the terms of the participating annuity contract are such that the employer has the same or much of the same exposure to gains or losses with regard to the pension benefit obligation or the plan assets before and after the transaction, then settlement accounting is not permitted. ##### [715-30-55-157](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-157) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:8bc44f9cf8530f1e4e2c773f204d1d56a4e9f0580b952e250b649ad232a29bf6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Example 2, Case C (see paragraph [715-30-55-209](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-209)) presents an illustration of a settlement in which participating annuities were concluded to qualify for settlement accounting. The relative cost of the participation right (10 percent) used in that Case is not intended to be an indication of a criterion that could be used to determine whether the purchase of a participating annuity contract qualifies for settlement accounting. Rather, the facts assumed in the Case were selected only to illustrate the application of paragraph [715-30-35-79](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-79). No other purpose was intended. There are no quantitative criteria that can be used to determine whether the purchase of a participating annuity contract qualifies for settlement accounting. Whether the purchase of a participating annuity contract qualifies for settlement accounting depends on the particular facts and circumstances. There are no generic, quantitative criteria that can be used. Each transaction shall be evaluated on its own merits given the general criteria provided in paragraphs [715-30-35-84 through 35-88](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-84) . ##### [715-30-55-158](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-158) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:6f2224e8afc445b0b3b8c5ab60355321e647a814823605f40ec2179d01fb0bca Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A transaction may qualify for settlement accounting in the separately issued financial statements of a subsidiary, yet not qualify in the parent entity's consolidated financial statements. For example, if a parent entity's wholly owned subsidiaries, Subsidiaries A and B, have separate pension plans and Subsidiary B purchases nonparticipating annuity contracts from Subsidiary A (which is an insurance entity) to provide the vested pension benefits under Subsidiary B's pension plan, that transaction does not constitute a settlement in the parent entity's consolidated financial statements. It does not qualify because the guidance in paragraph [715-30-35-84](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-84) excludes annuity contracts purchased from an entity that is controlled by the employer from settlement accounting as such a transaction merely shifts the risk from one part of the entity to another part of the same entity. Since significant risks related to a pension benefit obligation and the plan assets remain with the employer, which is the economic entity comprising the parent entity and its subsidiaries, a settlement does not occur. ##### [715-30-55-159](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-159) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:276e0f53bcb7e6e325a3ec420596b8fc8664ec98e7819112593beca549d73613 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assuming the other criteria for a settlement are satisfied, the purchase of the nonparticipating annuity contracts discussed in the preceding paragraph does constitute a settlement in the separately issued financial statements of Subsidiary B, because significant risks related to a pension benefit obligation and the plan assets used to effect the settlement have been assumed by another entity that is not controlled by Subsidiary B. Disclosure of the related party nature of the settlement should be made pursuant to Section 850-10-50. ##### [715-30-55-160](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-160) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:600c4724c5f800e8d624127b87657544d5fbd361ebdcaced8c5550dc6e7280bb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A pension plan may use a [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.") other than fair value for purposes of determining 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.") under the guidance in paragraph [715-30-35-51](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-51). That basis shall not be used in determining the maximum gain or loss subject to pro rata recognition in earnings when a pension benefit obligation is settled. The fair value of plan assets as of the date of settlement shall be used. ##### [715-30-55-161](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-161) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:a5a15becbec4be5dc13bc154d9bea0d62b2097776b15ed7571d2051c6ec062d7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An employer may settle a pension benefit obligation and withdraw excess plan assets as part of terminating its pension plan. The settlement gain or loss determined pursuant to paragraph [715-30-35-79](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-79) should not be adjusted to eliminate any gains or losses included in accumulated other comprehensive income relating to securities issued by the employer if those securities are included in the plan assets withdrawn. In this situation, the settlement of a pension benefit obligation, not the withdrawal of plan assets, is the event that requires the employer to recognize in earnings any of the net gain or loss included in accumulated other comprehensive income. Further, withdrawal of plan assets does not affect the determination of the settlement gain or loss. Likewise, the nature of the plan assets withdrawn does not affect that determination. Whether the securities are sold by the pension plan and the employer repurchases them in the market with cash withdrawn from the pension plan or whether the securities are withdrawn should not affect the determination of the settlement gain or loss. ##### [715-30-55-162](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-162) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:ef0be6286362dc4b1a56c0eacbba95c8bd9b0557efcd4218a40a8ef18377fa32 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If nonparticipating annuity contracts are purchased from a less-than-majority-owned investee that is not controlled by the employer and the criteria for a settlement are satisfied, the resulting settlement gain or loss is not subject to partial recognition (that is, it should not be reduced to reflect the employer's ownership). The employer's noncontrolling ownership interest in the insurance entity that issues the nonparticipating annuity contracts does not affect the accounting for the settlement. Therefore, the entire settlement gain or loss should be recognized in earnings. The treatment of this intra-entity transaction is acknowledged to be a departure from traditional accounting under the equity method and is not intended to be a precedent for nonpension intra-entity transactions. ##### [715-30-55-163](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-163) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:64915e99bdd412bc048c3fa24d6202ba8a2e0057a542fe1adb6dfe38e09562ae Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The interest rates implicit in the purchase price of nonparticipating annuity contracts used to effect a settlement may be different from the assumed discount rates used to determine net periodic pension cost. If the rates are different, the employer should measure the portion of 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).") being settled and the remaining portion, if appropriate, using the implicit annuity interest rates. Consequently, the measurement of the portion of the projected benefit obligation being settled is the purchase price of the nonparticipating annuity contracts. Any gains or losses resulting from measuring the projected benefit obligation and the plan assets are included in the maximum gain or loss subject to pro rata recognition in earnings before the settlement gain or loss to be recognized is determined. In determining whether it is appropriate to measure the unsettled portion of the projected benefit obligation using the implicit annuity interest rates, consideration should be given to the demographics of the participants related to the settled and unsettled portions of the projected benefit obligation. If the demographics are similar and, therefore, there is a similar length of time until payments are due and the implicit annuity interest rates reflect the best estimate of the rates at which the unsettled portion could be effectively settled (as discussed in paragraphs [715-30-35-43 through 35-46](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-43) ), then it is appropriate to measure the unsettled portion of the projected benefit obligation using those rates. If use of those rates is not appropriate, then rates as of the date of the settlement that do satisfy the requirements of those paragraphs shall be used to measure the unsettled portion of the projected benefit obligation. ##### [715-30-55-164](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-164) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:0eb61cc8cec4265c3e101bb0afd2f1e93bd2f6b788b97f4bf803385bd5ab2418 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [715-30-35-79](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-79) provides accounting guidance on the use of participating annuity contracts in settlement transactions. Example 2, Case C (see paragraph [715-30-55-209](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-209)) illustrates a settlement transaction using participating annuity contracts and a method that determines the maximum gain subject to pro rata recognition in earnings by first reducing the net gain included in accumulated other comprehensive income by the cost of the participation right. The allocation method illustrated in that Case is not the only permitted method that may be used. In determining the maximum gain subject to pro rata recognition in earnings, any of the following alternative methods may be used, provided the approach selected is applied consistently from year to year. An amount equal to the cost of the participation right could be allocated in any of the following ways: 1. a Initially to the transition asset remaining in accumulated other comprehensive income 2. b Initially to the net gain included in accumulated other comprehensive income 3. c On a pro rata basis to the transition asset remaining in accumulated other comprehensive income and the net gain included in accumulated other comprehensive income. ##### [715-30-55-165](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-165) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:080cbfd5fdeaa588c406664d5969c6dc8c329c255cf9ab52a7a3692ff1e29fd4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Because the allocation method can affect the determination of subsequent periods' net periodic pension cost, allocation on a pro rata basis (alternative \[c\] in the preceding paragraph) is recommended because it is an unbiased approach. ##### [715-30-55-166](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-166) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:819f08983367b7a5f64e5b2d9613e0426d3a89c10be50c75d82280b5e32823b2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [715-30-35-82](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-82) requires recognition in earnings of gains or losses from settlements 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 and permits such recognition if the cost of settlements is less, as long as the policy is applied consistently. As an example of an acceptable accounting policy, an employer may adopt a policy that requires recognition in earnings of gains or losses from all settlements during the year for a pension plan if the cost of those settlements exceeds the service cost component of net periodic pension cost for that pension plan for the year. ##### [715-30-55-167](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-167) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:6219fe5d32e80fe9da8fd555c386bcf43499de236cc6d9e609acccafb2980485 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A settlement gain or loss may need to be recognized as a change in accounting estimate following the guidance in Topic 250 as in the following situation. Assume that an employer's accounting policy is not to recognize in earnings a gain or loss from a settlement if the cost of all settlements during the year does not exceed the sum of the service cost and interest cost components of net periodic pension cost for the pension plan for the year and all of the following occur: 1. a It is estimated at the beginning of the year that the cost of all settlements during the year will not exceed the threshold amount described. 2. b A pension benefit obligation is settled during the first quarter and a settlement gain or loss is not recognized. 3. c In the second quarter and after the issuance of the first quarter's interim report, it is determined that the cost of all settlements during the year will exceed the threshold amount. ##### [715-30-55-168](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-168) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:7099835a60320fcf8399e5956da34de2c4d8ee200fcf10463d2380857cd834aa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In the situation described in the preceding paragraph, the settlement gain or loss should be recognized in the second quarter consistent with the accounting for a change in accounting estimate as required by paragraphs [250-10-45-17](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-17) and [270-10-45-14](https://asc.understandingaccounting.org/asc/270/10/#270-10-45-14). ##### [715-30-55-169](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-169) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:aa235939d5a5d90c4bb5f78fb793f557f2cd08f120613f9840e6f1362dddd56e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Settlements, Curtailments, and Special Term Benefits Subsection of Section 715-30-35 provides the general guidance on curtailment transactions. The following curtailment-related implementation guidance is organized in two categories: 1. a Meeting the criteria for curtailment 2. b Curtailment measurement issues. ##### [715-30-55-170](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-170) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:c8a7f7acb826e39af4023ed5e3b0946aa80a3c6dc75e4858b6601d030c98c23f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In the definition of the term [plan 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."), there is no specific threshold for determining if an event results in a significant reduction of expected years of future service of present employees covered by a pension plan or an elimination of the accrual of pension benefits for some or all future services of a significant number of employees covered by a pension plan. Judgment shall be applied to determine what is significant for each pension plan (the unit of accounting) based on the facts and circumstances. For example, an employer may have a pension plan covering employees in several divisions. The employer terminates employees in one of those divisions and the expected years of future service of present employees in that division are reduced significantly, but the reduction is not significant in relation to the expected years of future service of all employees covered by the pension plan. Because the event involves an insignificant reduction of expected years of future service of present employees covered by the pension plan, a curtailment does not occur. The results of the event are a gain or loss as described in paragraphs [715-30-35-18 through 35-19](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-18) that is subject to the requirements of paragraphs [715-30-35-24 through 35-25](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-24) . ##### [715-30-55-171](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-171) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:3a3c5a23e90819de9cb6bf011f35779dffad9b6804ab2ab897f75d94abb0f19b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a layoff significantly reduces the expected years of future service of present employees covered by a pension plan, a curtailment occurs even if the layoff is expected to be temporary. For example, a curtailment occurs in both of the following actions: 1. a The employer temporarily lays off a significant number of present employees covered by a pension plan. 2. b The employer temporarily suspends a pension plan so that employees covered by the pension plan do not earn additional pension benefits for some or all of their future services. ##### [715-30-55-172](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-172) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:4dec716d4717745a3a32da64a80fde3d3507e598b00cf7ead6dfa3d22b9d934c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Likewise, if a pension [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.") eliminates significant pension benefit accruals for some or all of present employees' future services, a curtailment occurs even if the pension plan suspension is expected to be temporary. Unrelated, individually insignificant reductions of expected years of future service of employees covered by a pension plan that accumulate over a single year or more than one year to a significant reduction do not constitute a curtailment. However, each of the reductions results in a gain or loss as described in paragraphs [715-30-35-18 through 35-19](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-18) that is subject to the requirements of paragraphs [715-30-35-24 through 35-25](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-24) . This evaluation is in contrast to the situation in which individually insignificant reductions of expected years of future service of employees covered by a pension plan are caused by one event, such as a strike, or are related to a single plan of reorganization and those reductions accumulate during more than one fiscal year to a significant reduction. The fact that the reductions occur over a period of time in this situation does not affect the determination that an event giving rise to a curtailment has occurred. ##### [715-30-55-173](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-173) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:1ad6be0639f59181c70cc2d803b73db41fd50ca74625cfcf05b9cc74f3a6f932 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [715-30-55-130](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-130) points out that the guidance in the Settlements, Curtailments, and Certain Termination Benefits Subsections of this Subtopic on settlements and curtailments is affected by whether there is a successor pension plan. If an employer terminates a pension plan and establishes a successor pension plan that provides additional but reduced pension benefits for all years of employees' future service, a curtailment does not occur. If the successor pension plan provides incremental but reduced pension benefits for all years of employees' future service, the substance of the transactions is to maintain the same pension plan but with reduced pension benefits. Accordingly, the reduction in pension benefits is accounted for as a negative pension plan amendment. See the guidance in paragraph [715-30-55-54](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-54) related to a negative retroactive plan amendment. In this situation, pension benefits are reduced but not eliminated since employees continue to accrue pension benefits for all years of future service. ##### [715-30-55-174](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-174) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:bf41629feff3d6c7ad6ddcf32739b9b6bc66e02d130069c1a75818f9e812d4aa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A curtailment can occur if a pension plan is terminated and replaced by a successor pension plan under certain conditions. A curtailment occurs if the successor pension plan eliminates for a significant number of employees the accrual of defined pension benefits for some or all of their future services. Two examples follow: 1. a A successor pension plan that covers only half of the employees previously covered by the terminated pension plan. The reference to half of the employees in this example is for illustrative purposes only and is not intended to be indicative of the minimum coverage necessary to qualify a pension plan as a successor pension plan. See paragraph [715-30-55-130](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-130). 2. b A successor pension plan that does not provide for the accrual of additional defined pension benefits for certain years of future services. To illustrate this situation, assume a pension plan provides a flat benefit of $1,500 per year of service. At the end of 20X0, the employer terminates that pension plan and establishes a successor pension plan that provides a flat benefit of $1,000 per year for all years of service, including service under the terminated pension plan. Pension benefits earned under the successor pension plan are reduced by the pension benefits earned under the terminated pension plan. At the end of 20X0, Employee A with 5 years of service has an accumulated pension benefit of $7,500 per year under the terminated pension plan ($1,500 x 5 years of service). For years 20X1, 20X2, and the first half of 20X3, Employee A will accrue no additional pension benefits. The accrual of additional pension benefits will commence in the second half of 20X3. If a significant number of employees will not accrue additional pension benefits for some or all of their future services (as is the situation for Employee A), a curtailment occurs. ##### [715-30-55-175](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-175) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:9408411b972866b3d5c25570abf00b1f347005baa692e6ff12f9ca0e997e18b3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An employer is permitted to amortize [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.") on a straight-line basis over the average remaining service period of employees expected to receive the related pension benefits under the guidance in paragraph [715-30-35-13](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-13) in order to reduce the complexity and detail of the computations that would otherwise be required by the guidance in paragraph [715-30-35-11](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-11). ##### [715-30-55-176](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-176) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:25cfc8aaae6a361aea28706293adfc469ed18b7ef1841bc4ca30c23fafe26294 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [715-30-35-92](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-92) specifies that the prior service cost included in accumulated other comprehensive income associated with years of service no longer expected to be rendered as a result of a curtailment is a loss. Even if the employer uses an [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.") method permitted by paragraph [715-30-35-13](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-13) (such as straight-line amortization over average remaining service period, as described in the preceding paragraph) rather than the approach described in paragraph [715-30-35-11](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-11), the basic approach in paragraph [715-30-35-92](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-92) should be retained. In that situation, the ability to associate prior service cost included in accumulated other comprehensive income with years of service no longer expected to be rendered is more difficult and the result may be less precise. Use of the percentage reduction of years of service after the curtailment may be necessary. For example, if the future years of service determined as of the immediately preceding measurement date for those employees covered under a prior pension plan amendment are reduced by 50 percent due to a curtailment, the employer would recognize in earnings 50 percent of the prior service cost included in accumulated other comprehensive income. ##### [715-30-55-177](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-177) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:f3c3e771abb448a9aa6cb582302715858e8aee9ab2cd640aa69058a4308607dc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A curtailment may occur because an employer terminates or suspends a pension plan, so that employees do not earn additional pension benefits for future service, but the employees continue to work for the employer. In such a situation, any prior service cost included in accumulated other comprehensive income associated with the employees affected by the pension plan termination or suspension shall be included in determining the net gain or loss to be recognized for the curtailment. ##### [715-30-55-178](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-178) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:2dcca70db7e0e373c73c767876d50c171af71ca79218dc6cd7b83446a5f2df58 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. One reason that this Subtopic provides for delayed recognition in net periodic pension cost of prior service cost is the likelihood of future economic benefits to the employer as a result of a retroactive pension plan amendment. Those pension benefits are associated with the future services of those employees at the date of the pension plan amendment who are expected to receive pension benefits under the pension plan. Because a pension plan termination (or suspension) eliminates the accrual of pension benefits for all (or some) of those future services, it raises sufficient doubt about the continued existence of the future economic benefits of the retroactive pension plan amendment to justify recognition in earnings of any prior service cost included in accumulated other comprehensive income. Further, upon termination of a pension plan without the establishment of a successor pension plan, all remaining items included in accumulated other comprehensive income are recognized in earnings. ##### [715-30-55-179](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-179) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:cfc866253537c5c4affeccaeb3467dee13d453e5e1a69f2150ef5931b63fdc5c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [715-30-55-171](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-171) provides that a curtailment may result even if a layoff or suspension of benefits is temporary. If a curtailment is due to a pension plan suspension that may be only temporary, for example, the pension plan suspension will end as soon as the employer's financial condition sufficiently improves, the net gain or loss from the curtailment shall be determined based on the [probable](https://asc.understandingaccounting.org/glossary/p/#probable "The future event or events are likely to occur.") duration of the pension plan suspension. If that duration is a range of years and no single period in that range is a better estimate than any other period, then the determination shall be based on the estimate of duration within that range that results in the minimum net gain or loss from the curtailment. ##### [715-30-55-180](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-180) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:49a64e4bbadf5206ee6aaecc3a5bb6918984cfec3c60fa68a9856df65bc7aa2d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. There may be a balance remaining of the transition asset or obligation included in accumulated other comprehensive income after the employer accounts for a curtailment as required by the Settlements, Curtailments, and Certain Termination Benefits Subsections of this Subtopic. If a curtailment occurs causing almost all of the pension plan's participants to become permanently inactive, the employer shall continue to amortize any transition asset or obligation remaining in accumulated other comprehensive income using the remainder of the amortization period determined at transition. ##### [715-30-55-181](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-181) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:5bf1ebfe2eb28133476ca893c6d75f1e93306d790b4a4756dc73f952315797c0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [715-30-35-93](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-93) describes the determination of any curtailment gain or loss, including the effect of certain amounts in accumulated comprehensive income. It is possible that both a transition asset remains in accumulated other comprehensive income and a larger (smaller) net loss included in accumulated other comprehensive income exists at the date of a curtailment that decreases (increases) the projected benefit obligation. However, the intent of that paragraph is not to provide a mechanism for offsetting a net loss included in accumulated other comprehensive income against any transition asset remaining in accumulated other comprehensive income or increasing a net loss included in accumulated other comprehensive income. Therefore, the decrease (increase) in the projected benefit obligation that is not recognized as a curtailment gain (loss) shall be offset against the net loss included in accumulated other comprehensive income (transition asset remaining in accumulated other comprehensive income). There shall be no further offsetting. See Example 4 (paragraph [715-30-55-216](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-216)) for an illustration of this guidance. ##### [715-30-55-182](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-182) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:5bbc43531ee6c9365f5de91552872ad57615476bcf67786e352b6e6c5b48fb63 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If both a transition asset remaining in accumulated other comprehensive income and a net gain included in accumulated other comprehensive income exist at the date of a curtailment that increases the projected benefit obligation, the effects of the curtailment shall be offset using any one of the following three approaches, provided it is applied consistently from year to year. However, for the reason noted in paragraph [715-30-55-208](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-208) on settlement accounting, the recommended approach is to offset both on a pro rata basis (alternative \[c\]). The three approaches for offsetting the curtailment are as follows: 1. a Initially against the transition asset remaining in accumulated other comprehensive income 2. b Initially against the net gain included in accumulated other comprehensive income 3. c Against both on a pro rata basis. ##### [715-30-55-183](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-183) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:66f4aa3fd49947170f135d0d3682bffcb821cb2cf037ad191adaac05f2ee1e7c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An employer may adopt a plan to terminate employees that will significantly reduce the expected years of future service of present employees covered by a pension plan and the sum of the effects of the resulting curtailment identified in paragraphs [715-30-35-92 through 35-93](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-92) may be expected to be a net gain. In this situation, the net gain from the curtailment shall be measured and recognized when the related employees terminate. ##### [715-30-55-184](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-184) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:55e03901fa51c22738cdf402b04b70b6d8061afb9fd8110b4c813ccba04e8598 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If an employer amends its pension plan to provide for its termination or suspension and thereby eliminates for a significant number of employees the accrual of all or some of the pension benefits for their future services after a subsequent date (that is, the effective date of the pension plan termination or suspension is after the amendment date) and the sum of the effects of the resulting curtailment identified in paragraphs [715-30-35-92 through 35-93](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-92) is a net gain, that gain shall not be recognized in earnings when the pension plan termination or suspension is effective, but rather the net gain from the curtailment should be measured and recognized in earnings when the employer amends its pension plan. ##### [715-30-55-185](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-185) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:71c295fabedb572a62701f462de15e47b548ad9bc7e7f8c55ec31fd82298a2a5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [715-30-25-9 through 25-13](https://asc.understandingaccounting.org/asc/715/30/#715-30-25-9) provide general guidance on special termination benefits and contractual termination benefits. ##### [715-30-55-186](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-186) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:f6136fe112896253a2b7faa638d0215c71acd385ec46f801d961610120f32981 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An employer that offers, for a short period of time, special termination benefits to employees, shall not recognize a loss at the date the offer is made based on the estimated acceptance rate. Paragraph [715-30-25-10](https://asc.understandingaccounting.org/asc/715/30/#715-30-25-10) requires offers of special termination benefits to be recognized when the employees accept the offer and the amount can be reasonably estimated. ##### [715-30-55-187](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-187) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:dfed9039a49fee82fb528fbd3491c1bbd17b8ae213168b686e50ce8444b98eb9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An employer may offer special termination benefits that result in a curtailment. It is possible that the offer of termination benefits could be recognized in a reporting period different from the period in which the curtailment is recognized because a net loss from a curtailment (as defined in paragraph [715-30-35-94](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-94)) is recognized when it is probable that a curtailment will occur and the effects are reasonably estimable, while as indicated in paragraph [715-30-25-10](https://asc.understandingaccounting.org/asc/715/30/#715-30-25-10), the cost of special termination benefits is not recognized until employees accept the offer and the amount can be reasonably estimated. ##### [715-30-55-188](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-188) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:6b4b9010070dd57d0211dd695226181d3521118c0450cec84c29084c3b12daa6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An employer may sponsor a pension plan that provides supplemental early retirement benefits. Such pension benefits shall not be accounted for as contractual termination benefits, rather, supplemental early retirement benefits shall be accounted for as part of net periodic pension cost pursuant to the [attribution](https://asc.understandingaccounting.org/glossary/a/#attribution "The process of assigning pension or other postretirement benefits or costs to periods of employee service.") approach described in paragraphs [715-30-35-36 through 35-38](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-36) . ##### [715-30-55-189](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-189) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:a446c8374b9027a630bfef4ec4977bf9308323bccc8a3fbf9fdc452e92aaadad Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Plans providing [termination indemnities](https://asc.understandingaccounting.org/glossary/t/#termination-indemnities "Arrangements, usually or more frequently encountered outside the United States, that are also referred to as termination allowances or severance indemnities. Termination indemnities are amounts payable to eligible employees upon termination of employment. Eligibility may be determined by law, by local custom, by the employer's policy, or by contract with the employer. Plans may or may not be in writing. Termination indemnities are normally, but not exclusively, associated with preretirement severance of employment. They are usually payable as a lump sum, or occasionally in a few payments over a short period of time.") that are associated with preretirement termination of employment shall be assessed on a case-by-case basis. If benefits are paid only for involuntary termination of employment due to the occurrence of a specific event, they qualify as contractual termination benefits, and a liability and a loss shall be recognized when it is probable that employees will receive benefits and the amount can be reasonably estimated. However, if a plan is, in substance, a pension plan (for example, if benefits are paid for virtually all terminations), the plan is subject to the provisions of the General Subsections of this Subtopic. See paragraphs [420-10-55-1](https://asc.understandingaccounting.org/asc/420/10/#420-10-55-1) and [420-10-55-16](https://asc.understandingaccounting.org/asc/420/10/#420-10-55-16) for additional guidance in making this determination. However, if payment of the benefits results directly from a sale or disposal of a component of an entity, the cost of those benefits shall be recorded and recognized pursuant to paragraph [205-20-45-3](https://asc.understandingaccounting.org/asc/205/20/#205-20-45-3). ##### [715-30-55-190](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-190) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:aaaaa68f59b6a830b2d3f06fd50819b1a121de394b40e253dc53e13d22b7294b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In connection with terminating its pension plan, an employer may settle the pension benefit obligation and withdraw excess plan assets and then contribute and allocate those assets to participants' accounts in a new defined contribution pension plan. In this situation, an employer shall not combine any net gain or loss from the settlement and curtailment of the terminated plan with the net periodic pension cost from the contribution to the defined contribution pension plan and thereby report both on a net basis for purposes of classification in the income statement or disclosure in accompanying notes to financial statements. Because the following two separate events have occurred that require separate accounting recognition, netting the results of the separate events is inappropriate: 1. a A pension plan termination resulting in recognition in earnings of all net pension amounts included in accumulated other comprehensive income 2. b A contribution of assets to a defined contribution pension plan resulting in recognition of net periodic pension cost equal to the amount contributed and allocated. ##### [715-30-55-191](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-191) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:611889f34ca8864cb037f59019dca2393b9e9221c77c7fe8159cb967ff35c0b2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-01](https://asc.understandingaccounting.org/updates/asu-2015-01/). ##### [715-30-55-192](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-192) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:e2b10fe55a3fbf58b1a348f0756fa7bc62bf45d30942d3d67e94f9abc450db15 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-01](https://asc.understandingaccounting.org/updates/asu-2015-01/). ##### [715-30-55-193](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-193) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:f9fe53edd8926c1c1a5615342445ca768a84dab5bda9ed2c2cdfda27c54746c3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An employer may sell a [component of an entity](https://asc.understandingaccounting.org/glossary/c/#component-of-an-entity "A component of an entity comprises operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the entity. A component of an entity may be a reportable segment or an operating segment, a reporting unit, a subsidiary, or an asset group.") and may settle a pension benefit obligation related to the employees affected by the sale. The separate classification of the settlement gain or loss, recognized pursuant to paragraphs [715-30-35-79 through 35-83](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-79) , in discontinued operations requires an evaluation of the facts and circumstances. ##### [715-30-55-194](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-194) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:a26c5381a4708d84069716be3b3e4bf0d2bcf9ef49fc92d67d14baa8fbb2432f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [205-20-45-5(c)](https://asc.understandingaccounting.org/asc/205/20/#205-20-45-5) indicates that a settlement is directly related to the disposal transaction if there is a demonstrated cause-and-effect relationship and the settlement occurs no later than one year following the disposal transactions, unless it is delayed by events or circumstances beyond an entity's control. In a disposal of a component of an entity, the timing of a settlement may be at the discretion of the employer. If the employer simply chooses to settle a pension benefit obligation at the time of the sale, the resulting coincidence of events is not, in and of itself, an indication of a cause-and-effect relationship and, therefore, paragraphs [715-30-35-79 through 35-83](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-79) apply. However, a direct cause-and-effect relationship can be demonstrated if, for example, settlement of a pension benefit obligation for those employees affected by the sale is a necessary condition of the sale. ##### [715-30-55-195](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-195) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:af484e5978ac2b32f6364c9be7bc7e5ed5c4b1d7d6a2477ffab52b436300f00c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A settlement or a curtailment may occur as a direct result of a disposal of a component of an entity or a business or nonprofit activity. Paragraph [715-30-35-94](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-94) requires that a curtailment loss be recognized in earnings when it is probable that the curtailment will occur and related amounts are reasonably estimable. Therefore, although a reporting entity may not have satisfied all the criteria in paragraphs [205-20-45-1A through 45-1D](https://asc.understandingaccounting.org/asc/205/20/#205-20-45-1A) necessary to classify the operations of the component or business or nonprofit activity as discontinued operations, a curtailment loss (determined in accordance with paragraphs [715-30-35-92 through 35-93](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-92) ) shall be recognized if it is probable that the disposal will occur and the amount of the curtailment loss is reasonably estimable. Furthermore, paragraph [715-30-35-94](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-94) requires that a curtailment gain be recognized in earnings when the related employees terminate or the plan suspension or amendment is adopted. The curtailment gain or loss shall be classified in income from continuing operations until the reporting entity satisfies those criteria in paragraphs [205-20-45-1A through 45-1D](https://asc.understandingaccounting.org/asc/205/20/#205-20-45-1A) for reporting discontinued operations. ##### [715-30-55-196](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-196) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:cff2583d1ab54fb4989f556b8f994059ed9189eb5e916bb271dce9a660b2a50b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A settlement gain or loss is recognized in earnings at the time that the settlement occurs. If a pension obligation associated with the disposal group is settled upon or after meeting the criteria for reporting discontinued operations in paragraphs [205-20-45-1A through 45-1D](https://asc.understandingaccounting.org/asc/205/20/#205-20-45-1A) , the related gain or loss (determined in accordance with paragraph [715-30-35-79](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-79)) shall be recognized in earnings in the period in which the settlement occurs and classified in discontinued operations provided that the settlement is directly related to the disposal transaction. ##### [715-30-55-197](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-197) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:651f80ac17d2ffad4c78fbec4b389b7734fdd064049f275b9a3cfc24cf484639 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a curtailment loss results from the disposal of a component of an entity, it is likely that the curtailment loss will be recognized earlier than the settlement gain or loss, if any, is recognized. As indicated in paragraph [715-30-55-195](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-195), the curtailment loss, if reasonably estimable, shall be recognized when the disposal is probable. The settlement gain or loss, if any, however, shall be recognized when the settlement occurs. See Example 9, Case A (paragraph [715-30-55-247](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-247)) for an illustration in which the curtailment loss is recognized earlier than the settlement gain. See also Example 9, Case B (paragraph [715-30-55-250](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-250)), which demonstrates the less likely scenario in which the effects of the curtailment and the settlement are recognized in the same reporting period. #### Illustrations ##### [715-30-55-198](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-198) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:2b498d93d4fe620f80d29608ee0b8d42fd67528b83df5569a4f38fe65734b183 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the guidance in paragraph [715-30-35-78](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-78) relating to accounting for a plan termination without a replacement defined benefit plan. ##### [715-30-55-199](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-199) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:68afc4968069ab08925ff41702a87cd9f591438efa1f64f117f3d6f112abfaa6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In this Example, it is assumed that Entity A sponsored a final-pay noncontributory defined benefit plan. On November 16, 20X0, the employer terminated the plan, settled 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.") of $1,500,000 (nonvested benefits became vested upon termination of the plan) by purchasing nonparticipating annuity contracts, and withdrew excess assets. Defined benefits were not provided under any successor plan. The plan ceased to exist as an entity. ##### [715-30-55-200](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-200) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:848ddd9dc3e5ec079ce0dc1415e8239ba8932ef8ebfa89f6ed128c4412679b09 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As a result, Entity A recognized a gain of $900,000 in earnings, determined as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-2438C54A-EED9-4C17-B6B6-3A24B3DA553D-low.gif) Entity A (in thousands) Before Termination Effect of Termination After Termination Assets and obligations: Accumulated benefit obligation " $(1,500)" " $1,500 " (a) $- Effects of projected future compensation levels (400) 400 (b) - Projected benefit obligation " (1,900)" " 1,900 " - Plan assets at fair value " 2,100 " " (1,500)" (a) (600) (c) - Funded status and recognized asset $200 $(200) $- Amounts recognized in accumulated other comprehensive income: "Transition asset (d),(e)" $(200) $200 $- Net gain (e) (300) 300 - $(500) $500 $- (a) "The accumulated benefits of $1,500 were settled by using an equivalent amount of plan assets to purchase nonparticipating annuity contracts." (b) "The effects of projected future compensation levels ceased to be an obligation of the plan or the employer due to the termination of all plan participants. Paragraph 715-30-35-93 requires that any curtailment gain be first offset against any existing net loss included in accumulated other comprehensive income. Because the existing amount included in accumulated other comprehensive income in this case was a gain ($200 remaining transition asset plus $300 net gain), the $400 gain from the curtailment was recognized." (c) "Plan assets, in excess of the amount used to settle the pension benefits, were withdrawn from the plan." (d) A transition asset remaining in accumulated other comprehensive income is treated as a net gain. (e) "A pro rata amount of the maximum gain (see paragraph 715-30-35-79), which includes the net gain included in accumulated other comprehensive income ($300) and the transition asset remaining in accumulated other comprehensive income ($200), is recognized due to settlement. The projected benefit obligation was reduced from $1,500 to $0 (the curtailment initially reduced the projected benefit obligation from $1,900 to $1,500 as described in footnote \[b\]), a reduction of 100 percent. Accordingly, the entire amount included in accumulated other comprehensive income of $500 ($300 + $200) was recognized in earnings." The journal entry required to reflect the accounting for the plan termination follows. Cash $600 Other comprehensive income-transition asset 200 Other comprehensive income-net gain 300 Pension asset $200 Gain from plan termination 900 The gain from the plan termination without a replacement defined benefit plan was composed of the following. Gain from curtailment $400 Gain from settlement 500 Total gain $900 ##### [715-30-55-201](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-201) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:0b1a81eb8b9eecfd64dec27ec587fc70e82b834c8f58092c592919a498695b88 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [715-30-35-81](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-81) requires that plan assets and the projected benefit obligation be measured as of the date the settlement occurs. The amount of the accumulated benefit obligation settled and the amount of plan assets used to purchase nonparticipating annuity contracts are equal in this, and certain other settlement-related Examples in this Subsection. It is not appropriate to conclude that no gains or losses occurred when the projected benefit obligation and the plan assets were measured as of the date of the settlement. The columns representing amounts before the transactions in the Examples reflect the plan assets and the projected benefit obligation as of the date of the settlement and include any gains or losses that arose from the measurements as of that date. ##### [715-30-55-202](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-202) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:3bdd4c12286f6479c44013bea51ebd8d2e4c3b534bac552dede8e441cbe92fb7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the accounting for a settlement of a pension obligation in three specific situations following the settlement-related guidance in the Settlements, Curtailments, and Certain Termination Benefits Subsection of Section 715-30-35. The following Cases illustrate situations in which: 1. a The projected benefit obligation exceeds plan assets (Case A). 2. b Plan assets exceed the projected benefit obligation (Case B). 3. c Plan assets exceed the projected benefit obligation and a participating annuity contract is purchased to settle benefits (Case C). ##### [715-30-55-203](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-203) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:76f3bacace838cef7bad40f487ce95943a28fe26decce1f1880039b10bf7376a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In each Case, the entity settled a portion of the obligation after transition to the requirements of this Subtopic. The Cases differ based on whether they had a retroactive plan amendment after transition or not and whether they had a transition asset or a transition obligation remaining in accumulated other comprehensive income. ##### [715-30-55-204](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-204) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:985eebffdfb2b941bc21075280eba18f91665a72e4fb3860a58970a3c7c65442 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Case illustrates the settlement of a pension obligation for a situation in which the projected benefit obligation exceeds plan assets. In this Case, Entity A had a retroactive plan amendment after the transition to the requirements of this Subtopic and also had a transition obligation remaining in accumulated other comprehensive income. ##### [715-30-55-205](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-205) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:32437b457802c849a427e9397ba4f993c79739a653bc780e3ab765254c85afb2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entity A sponsors a final-pay noncontributory defined benefit plan. On December 31, 20X0, the plan settled the vested benefit portion ($1,300,000) of the projected benefit obligation through the purchase of nonparticipating annuity contracts. As a result, Entity A recognized a gain of $195,000 in earnings, determined as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-CC61BA8C-116E-4BC4-8C30-8C595676D6BB-low.gif) Entity A (in thousands) Before Settlement Effect of Settlement After Settlement Assets and obligations: Vested benefit obligation " $(1,300)" " $1,300 " (a) $- Nonvested benefits (200) (200) Accumulated benefit obligation " (1,500)" " 1,300 " (200) Effects of projected future compensation levels (500) (500) Projected benefit obligation " (2,000)" " 1,300 " (700) Plan assets at fair value " 1,400 " " (1,300)" (a) 100 Funded status and recognized liability $(600) $- $(600) Amounts recognized in accumulated other comprehensive income: Transition obligation (b) $650 $650 Prior service cost 150 150 Net gain (c) (300) $195 (105) $500 $195 $695 (a) "The vested benefits of $1,300 were settled by using plan assets to purchase nonparticipating annuity contracts." (b) A transition obligation remaining in accumulated other comprehensive income is treated as prior service cost included in accumulated other comprehensive income and therefore is not affected by settlement of the obligation. (c) "A pro rata portion of the maximum gain (see paragraph 715-30-35-79), the net gain included in accumulated other comprehensive income, is recognized due to the settlement. The projected benefit obligation was reduced from $2,000 to $700, a reduction of 65 percent. Accordingly, 65 percent of the maximum gain of $300, a gain of $195, was recognized in earnings. The journal entry required to reflect the accounting for the plan settlement follows." Other comprehensive income-net gain $195 Gain from settlement $195 ##### [715-30-55-206](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-206) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:dc90bda669679242d888025bc91bc6b7a6ec8da931d0212a6a001c44ac5c5eac Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Case illustrates the settlement of a pension obligation for a situation in which the plan assets exceed the projected benefit obligation. In this Case, Entity B did not have a retroactive plan amendment after the transition to the requirements of this Subtopic but did have a transition asset remaining in accumulated other comprehensive income. ##### [715-30-55-207](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-207) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:03386a75a0c67872e7da57a3ff3b44fcb3b8a0253e9c23fe20426e1c6847f7cc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entity B sponsors a final-pay noncontributory defined benefit plan. On December 31, 20X0, the plan settled the vested benefit portion ($1,300,000) of the projected benefit obligation through the purchase of nonparticipating annuity contracts. As a result, Entity B recognized a gain of $325,000 in earnings determined as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-296FE6F2-D083-4756-A84C-F5F808561F6E-low.gif) Entity B (in thousands) Before Settlement Effect of Settlement After Settlement Assets and obligations: Vested benefit obligation " $(1,300)" " $1,300 " (a) $- Nonvested benefits (200) (200) Accumulated benefit obligation " (1,500)" " 1,300 " (200) Effects of projected future compensation levels (500) (500) Projected benefit obligation " (2,000)" " 1,300 " (700) Plan assets at fair value " 2,100 " " (1,300)" (a) $800 Funded status and recognized asset $100 $- $100 Amounts recognized in accumulated other comprehensive income: "Transition asset (b),(c)" $(200) $130 $(70) Net gain (c) (300) 195 (105) $(500) $325 $(175) (a) "The vested benefits of $1,300 were settled by using plan assets to purchase nonparticipating annuity contracts." (b) A transition asset remaining in accumulated other comprehensive income is treated as a net gain included in accumulated other comprehensive income. (c) "A pro rata portion of the maximum gain (see paragraph 715-30-35-79), which includes the net gain included in accumulated other comprehensive income ($300) and the transition asset remaining in accumulated other comprehensive income ($200), is recognized due to the settlement. The projected benefit obligation was reduced from $2,000 to $700, a reduction of 65 percent. Accordingly, 65 percent of the maximum gain of $500 ($300 + $200), a gain of $325, was recognized in earnings. The journal entry required to reflect the accounting for the plan settlement follows." Other comprehensive income-transition asset $130 Other comprehensive income-net gain 195 Gain from settlement $325 ##### [715-30-55-208](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-208) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:7822244d7478e7914a2bbbc8b0266fac9254df8095bd9ec877a6acb61e612a8a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Case and Case C allocate an amount equal to the settlement gain on a pro rata basis to the transition asset remaining in accumulated other comprehensive income and the net gain included in accumulated other comprehensive income. This is not the only method of allocation permitted under those circumstances by the Settlements, Curtailments, and Certain Termination Benefits Subsections of this Subtopic. An amount equal to the settlement gain could be allocated initially to the transition asset remaining in accumulated other comprehensive income or the net gain included in accumulated other comprehensive income, provided the approach selected is applied consistently from year to year. However, because the allocation method can affect the determination of subsequent periods' net periodic pension cost, allocation on a pro rata basis is recommended because it is an unbiased approach. ##### [715-30-55-209](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-209) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:ec8c0ebe84ac79e654f9aa563d8e0840639f6d8374d5fc70c1c0fd1a25fcf6ad Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Case illustrates the settlement of a pension obligation for a situation in which the plan assets exceed the projected benefit obligation and a participating annuity contract is purchased to settle benefits. In this Case, Entity C did not have a retroactive plan amendment after the transition to the requirements of this Subtopic but did have a transition asset remaining in accumulated other comprehensive income. This Case illustrates the guidance in paragraph [715-30-35-79](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-79) relating to accounting for the cost of a participation right if the purchase of a participating annuity constitutes a settlement. ##### [715-30-55-210](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-210) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:17806922cd29a996b1869937b90749901328653364bc801f74452ad2a5fa0997 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entity C sponsors a final-pay noncontributory defined benefit plan. On December 31, 20X0, the plan settled the vested benefit portion ($1,300,000) of the projected benefit obligation through the purchase of a participating annuity contract at a cost of $1,430,000. The plan could have purchased a nonparticipating contract covering the same benefits for $1,300,000. The participation features of the contract warranted a conclusion that its purchase constituted a settlement. See paragraph [715-30-55-157](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-157) for a discussion of this conclusion about the participation features. As a result, Entity C recognized a gain of $240,000, (rounded) in earnings, determined as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-1ED5FFFE-91D9-4589-9EC3-07CCDEA3E0E0-low.gif) Entity C (in thousands) Before Settlement Effect of Settlement After Settlement Obligations: Vested benefit obligation " $(1,300)" " $1,300 " (a) $- Nonvested benefits (200) (200) Accumulated benefit obligation " (1,500)" " 1,300 " (200) Effects of projected future compensation levels (500) (500) Projected benefit obligation " (2,000)" " 1,300 " (700) Plan assets at fair value: Participation right 130 (a) 130 Other plan assets " 2,100 " " (1,430)" (a) 670 " 2,100 " " (1,300)" 800 Funded status and recognized asset $100 $- $100 "Amounts recognized in accumulated other comprehensive income:" "Transition asset (b),(c)" $(200) $130 (d) $(70) Net gain (c) (300) 110 (d) (190) $(500) $240 $(260) (a) "The vested benefits of $1,300 were settled by using $1,430 of plan assets to purchase a participating annuity contract. However, a nonparticipating contract covering the same benefits could have been purchased for $1,300. The plan paid the additional $130 to obtain the participation right." (b) A transition asset remaining in accumulated other comprehensive income is treated as a net gain included in accumulated other comprehensive income. (c) "A pro rata amount of the maximum gain (see paragraph 715-30-35-79), which includes the net gain included in accumulated other comprehensive income ($300) and the transition asset remaining in accumulated other comprehensive income ($200), was recognized due to the settlement. However, any gain on a settlement that uses a participating annuity contract shall be computed by first reducing the maximum gain by the cost of the participation right \[$200 + ($300 - $130) = $370\]. The projected benefit obligation was reduced from $2,000 to $700, a reduction of 65 percent. Accordingly, a gain of $240 (rounded) was recognized (.65 x $370). The journal entry required to reflect the accounting for the plan settlement follows." Other comprehensive income-transition asset $130 Other comprehensive income-net gain 110 Gain from settlement $240 (d) The amount of gain from settlement was allocated as follows (rounded). Transition asset (.65 x $200) $130 Net gain \[.65 x ($300 - $130)\] 110 $240 ##### [715-30-55-211](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-211) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:71bed46b467c7e8eae7092faa9b12b4f8ab82d3b88957b4f781b2129a8320c56 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [715-30-55-208](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-208) for a discussion of the permitted methods for allocating settlement gain amounts. ##### [715-30-55-212](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-212) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:574dbae63f5976333c57f9b396c9bb52f70f49dcafe1766a68af625bf4bcbb78 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the calculation of prior service cost associated with the services of terminated employees that would be used to apply the guidance in paragraph [715-30-35-92](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-92). ##### [715-30-55-213](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-213) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:72dcdba696093d0bfd583fbd6fd62060993a744e13b2eb6928e257af1ea17093 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entity A sponsors a final-pay noncontributory defined benefit plan. On January 1, 20X0, the entity had a retroactive plan amendment resulting in prior service cost of $800,000. The prior service cost included in accumulated other comprehensive income that results from the plan amendment is amortized based on the expected future years of service of participants active as of January 1, 20X0, who are expected to receive benefits under the plan. As of January 1, 20X0, the entity had 100 employees who were expected to receive benefits under the plan. Based on the assumption that 5 percent of that group (5 employees) leaves (either quits or retires) in each of the next 20 years, the expected future years of service amounted to 1,050. ##### [715-30-55-214](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-214) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:f86a2fbf06e0cbe11bd7d758c3b2c5106711a6760a20c7fae57e5aeeb8cef8a6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The amount of prior service cost associated with each expected future year of service is $762 ($800,000 ÷ 1,050). The following table illustrates the originally expected expiration of the anticipated service years. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-E7C36CE8-677F-4B12-BAA0-C78ACAE97260-low.gif) Determination of Expected Years of Service Rendered in Each Year Before Curtailment Year Individuals Future Service Years X0 X1 X2 X3 X4 X5 X6 X7 X8 X9 Y0 Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 A1-A5 5 5 B1-B5 10 5 5 C1-C5 15 5 5 5 D1-D5 20 5 5 5 5 E1-E5 25 5 5 5 5 5 F1-F5 30 5 5 5 5 5 5 G1-G5 35 5 5 5 5 5 5 5 H1-H5 40 5 5 5 5 5 5 5 5 I1-I5 45 5 5 5 5 5 5 5 5 5 J1-J5 50 5 5 5 5 5 5 5 5 5 5 K1-K5 55 5 5 5 5 5 5 5 5 5 5 5 L1-L5 60 5 5 5 5 5 5 5 5 5 5 5 5 M1-M5 65 5 5 5 5 5 5 5 5 5 5 5 5 5 N1-N5 70 5 5 5 5 5 5 5 5 5 5 5 5 5 5 O1-O5 75 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 P1-P5 80 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 Q1-Q5 85 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 R1-R5 90 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 S1-S5 95 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 T1-T5 100 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 "1,050" Service years rendered 100 95 90 85 80 75 70 65 60 55 50 45 40 35 30 25 20 15 10 5 Amortization fraction 100 95 90 85 80 75 70 65 60 55 50 45 40 35 30 25 20 15 10 5 "1,050" "1,050" "1,050" "1,050" "1,050" "1,050" "1,050" "1,050" "1,050" "1,050" "1,050" "1,050" "1,050" "1,050" "1,050" "1,050" "1,050" "1,050" "1,050" "1,050" Expected future years of service remaining at year-end 950 855 765 680 600 525 455 390 330 275 225 180 140 105 75 50 30 15 5 0 Prior service cost " $800,000 " Total expected future years of service " 1,050 " Amortization amount per each year of service $762 ##### [715-30-55-215](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-215) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:38f1b51c752405eeeb1f66a8e167cd2e181944d220c5c9d88a97cc0bb646eb24 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. On December 31, 20X2, Entity A terminated 25 employees active at the date of the plan amendment. Immediately before the curtailment, 765 expected future years of service remained (1,050 less 285 years of service rendered in the previous 3 years). The curtailment reduced the total expected future years of service at December 31, 20X2, from 765 to 555 (210) as illustrated in the following table. Therefore, Entity A will recognize $160,020 ($762 × 210) of prior service cost in earnings in conjunction with the curtailment. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-99BCCBA3-C116-4F96-98FF-2C7FFB2BD6DC-low.gif) Determination of Expected Years of Service Rendered in Each Year after Curtailment Year Individuals X0 X1 X2 X3 X4 X5 X6 X7 X8 X9 Y0 Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 A1-A5 5 B1-B5 5 5 C1-C5 5 5 5 D1-D5 (a) 5 5 5 E1-E5 5 5 5 5 5 F1-F5 5 5 5 5 5 5 G1-G5 5 5 5 5 5 5 5 H1-H5 (a) 5 5 5 I1-I5 5 5 5 5 5 5 5 5 5 J1-J5 5 5 5 5 5 5 5 5 5 5 K1-K5 5 5 5 5 5 5 5 5 5 5 5 L1-L5 (a) 5 5 5 M1-M5 5 5 5 5 5 5 5 5 5 5 5 5 5 N1-N5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 O1-O5 (a) 5 5 5 P1-P5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 Q1-Q5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 R1-R5 (a) 5 5 5 S1-S5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 T1-T5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 Service years rendered 100 95 90 60 60 55 50 45 45 40 35 30 30 25 20 20 15 10 10 5 Adjustment for termination 210 Total 100 95 300 60 60 55 50 45 45 40 35 30 30 25 20 20 15 10 10 5 Amortization fraction 100 95 300 60 60 55 50 45 45 40 35 30 30 25 20 20 15 10 10 5 "1,050" "1,050" "1,050" "1,050" "1,050" "1,050" "1,050" "1,050" "1,050" "1,050" "1,050" "1,050" "1,050" "1,050" "1,050" "1,050" "1,050" "1,050" "1,050" "1,050" Expected future years of service remaining at year-end 950 855 555 495 435 380 330 285 240 200 165 135 105 80 60 40 25 15 5 0 (a) Terminated group of employees. ##### [715-30-55-216](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-216) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:bb701dc52bfc57af6bfc6371f0b29328e330929979b0f1081e79cfabc0a0e9d9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the guidance in paragraphs [715-30-35-93 through 35-94](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-93) relating to the effects on a curtailment if there is a transition asset remaining in accumulated other comprehensive income at the date of the curtailment. The following Cases present situations where there is also a net loss included in accumulated other comprehensive income at the time of the curtailment: 1. a Transition asset remaining in accumulated other comprehensive income is less than net loss included in accumulated other comprehensive income (Case A). 2. b Transition asset remaining in accumulated other comprehensive income exceeds net loss included in accumulated other comprehensive income (Case B). ##### [715-30-55-217](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-217) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:09ebb9f88f54b7adb417395120bf0acf05c7000ebb1c73dfc100891d6f82c6b8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Cases A and B share the following assumptions. An employer has a transition asset remaining in accumulated other comprehensive income. On July 1, 20X0, the employer decides to terminate a significant number of employees as part of a plan to reduce its operations. The effects of the terminations are reasonably estimable at that date. The termination of employees occurs on August 29, 20X0. ##### [715-30-55-218](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-218) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:992d4af7f6a5b03894daade179c03aba73938d9a114cae645f345e64d93df4d2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Case demonstrates the paragraph [715-30-35-94](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-94) guidance that requires that, if the sum of the effects resulting from a curtailment is a net gain, that gain be recognized in earnings when the related employees terminate (August 29, 20X0) and be based on plan assets and the projected benefit obligation measured as of that date. ##### [715-30-55-219](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-219) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:f85426d40a50ce6816ac1a8b8e3ad382b05f858b7da96c7eb264c8286a7b55f0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In this Case, the transition asset remaining in accumulated other comprehensive income is less than the net loss included in accumulated other comprehensive income. The projected benefit obligation based on future compensation levels and the nonvested accumulated benefit obligation related to the terminated employees decrease by $90,000 and $20,000, respectively. The curtailment is accounted for as of August 29, 20X0, as follows (in thousands). - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-1526003E-37DC-4902-B285-D9ABF31D345F-low.gif) "August 29, 20X0" Before Curtailment Effects of Curtailment After Curtailment Assets and obligations: Vested benefit obligation " $(1,550)" " $(1,550)" Nonvested benefits (250) $20 (230) Accumulated benefit obligation " (1,800)" 20 " (1,780)" Effect of future compensation levels (400) 90 (310) Projected benefit obligation " (2,200)" 110 (a) " (2,090)" Plan assets at fair value " 2,100 " " 2,100 " Funded status and recognized asset (liability) $(100) $110 $10 Amounts recognized in accumulated other comprehensive income: Transition asset $(200) $(200) Net loss 300 $(100) (a) 200 $100 $(100) $- (a) "Paragraph 715-30-35-94 requires that any curtailment gain be first offset against any existing loss included in accumulated other comprehensive income. Because that amount is a loss of $100 ($300 net loss included in accumulated other comprehensive income less the $200 transition asset remaining in accumulated other comprehensive income), the $110 decrease in the projected benefit obligation is initially offset against the loss, resulting in a $10 net gain from the curtailment. The journal entry to account for the curtailment follows." Pension asset $10 Pension liability 100 Gain from curtailment $10 Other comprehensive income-net loss 100 ##### [715-30-55-220](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-220) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:61c639013ed570938a93434ebb39c317f2caa704f5268810fcf4ef3236556702 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Case demonstrates the paragraph [715-30-35-94](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-94) guidance that requires that, if the sum of the effects resulting from a curtailment is a net loss, that loss be recognized in earnings when it is probable that a curtailment will occur and the effects described are reasonably estimable. ##### [715-30-55-221](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-221) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:3fee1c8acbad9eccd97d18e9227d457cf4a9e1e9ed115a427d078e2e9e29adc8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In this Case, the transition asset remaining in accumulated other comprehensive income exceeds the net loss included in accumulated other comprehensive income. The net change in the projected benefit obligation for the terminated employees is an increase of $110,000. There is an increase of $220,000 for supplemental early retirement benefits and a decrease of $110,000 relating to future compensation levels ($90,000) and nonvested accumulated pension benefits ($20,000). As a result, the curtailment is accounted for as of July 1, 20X0, as follows (in thousands). - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-76820DA7-6AE9-41CE-82A3-EC135686E807-low.gif) "July 1, 20X0" Before Curtailment Effects of Curtailment After Curtailment Assets and obligations: Vested benefit obligation " $(1,550)" $(220) " $(1,770)" Nonvested benefits (250) 20 (230) Accumulated benefit obligation " (1,800)" (200) " (2,000)" Effect of future compensation levels (400) 90 (310) Projected benefit obligation " (2,200)" (110) (a) " (2,310)" Plan assets at fair value " 2,100 " " 2,100 " Funded status and recognized liability $(100) $(110) $(210) Amounts recognized in accumulated other comprehensive income: Transition asset $(200) $100 (a) $(100) Net loss 100 100 $(100) $100 $- (a) "Pursuant to paragraph 715-30-35-94, the loss (that is, the increase in the projected benefit obligation) resulting from the curtailment is first offset against any net gain included in accumulated other comprehensive income. Because that amount is a gain of $100 ($100 net loss included in accumulated other comprehensive income plus the $200 transition asset remaining in accumulated other comprehensive income), the $110 increase in the projected benefit obligation is initially offset against the gain, resulting in a $10 net loss from the curtailment. The journal entry to account for the curtailment follows." Loss from curtailment $10 Other comprehensive income-transition asset 100 Pension liability $110 ##### [715-30-55-222](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-222) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:1622ff0e33543065d37f1b851f1821bdeb5003d37e3f3e3fff41258380e25149 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the guidance in paragraph [715-30-35-95](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-95) that addresses a curtailment if termination benefits are also involved. ##### [715-30-55-223](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-223) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:6ce4723a5a6fa4ef1285c888691842d2fd990be59ac6e52bdccf02ff24034a28 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entity A sponsors a final-pay noncontributory defined benefit plan and has a transition obligation remaining in accumulated other comprehensive income. On May 11, 20X2, the entity offered for a short period of time (until June 30, 20X2) special benefits to its employees in connection with their voluntary termination of employment (special termination benefits). The special termination benefit was a lump-sum payment to be made upon termination, payable in addition to the employee's regular plan benefits. The special termination benefit was paid directly from the employer's assets rather than from the plan assets. ##### [715-30-55-224](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-224) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:6dedd23c7250f32af3c128d6c6753af64f594aa4da87c1cf8af86b498c811ad2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. On June 30, 15 percent of the employees accepted the offer. The amount of the special termination benefit payment was $125,000. The portion of the projected benefit obligation based on the expected future compensation levels of the terminated employees amounted to $100,000, and all the employees terminated were fully vested in their accumulated benefits. The portion of the transition obligation remaining in accumulated other comprehensive income associated with the years of service no longer expected from the terminated employees was $150,000. As a result, Entity A recognized a loss of $175,000 in earnings that includes the cost of the special termination benefits and the loss, as determined using the guidance in paragraphs [715-30-35-92 through 35-94](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-92) , from the curtailment. ##### [715-30-55-225](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-225) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:dc91da7c34147921b548aec9b1c6380ce81a4cab1017b516f060e84e7503c487 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In this Example, the effects resulting from the curtailment were not reasonably estimable until June 30, 20X2, the acceptance date for the offer of special termination benefits. The loss was determined as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-66D736AA-3FA5-407E-8C0E-6033905BAE02-low.gif) Entity A (in thousands) Before Curtailment Effect of Curtailment After Curtailment Assets and obligations: Vested benefit obligation " $(1,300)" " $(1,300)" Nonvested benefits (200) (200) Accumulated benefit obligation " (1,500)" " (1,500)" Effects of projected future compensation levels (500) $100 (400) Projected benefit obligation " (2,000)" 100 (a) " (1,900)" Plan assets at fair value " 1,400 " " 1,400 " Funded status and recognized liability $(600) $100 $(500) Amounts recognized in accumulated other comprehensive income: Transition obligation (b) $800 $(150) $650 Net gain (300) (300) $500 $(150) $350 Loss on curtailment $50 Cost of special termination benefits (lump-sum payments to terminated employees) 125 Total loss recognized in earnings $175 (c) (a) "Paragraph 715-30-35-93 requires that any curtailment gain be first offset against any existing loss included in accumulated other comprehensive income. Since there was an existing gain of $300, the $100 gain from the curtailment was recognized in earnings." (b) The portion of the transition obligation remaining in accumulated other comprehensive income associated with the years of service no longer expected from the terminated employees ($150) was recognized in earnings. (c) "The loss Entity A recognized in earnings was $175, which includes the cost of the special termination benefits of $125, the gain related to salary progression of $100 and the reclassification of the transition obligation remaining in accumulated other comprehensive income of $150. The journal entry required to reflect the accounting for this event follows." Loss on employee terminations $175 Pension liability 100 Other comprehensive income-transition obligation $150 Liability for termination benefits 125 "If the entity had paid the termination benefits from the pension plan (by amending the plan and using plan assets), the same loss would have been recognized, but $125 would have been credited to the pension liability due to the decrease in plan assets, instead of credited to the liability for termination benefits." ##### [715-30-55-226](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-226) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:b7a8549b73069f331d7ffb4d599aa11e85d4c714fffb4272cb16a63b6205b3e4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the guidance in paragraph [715-30-25-11](https://asc.understandingaccounting.org/asc/715/30/#715-30-25-11) relating to the determination of the liability and the losses from employees' acceptance of an offer of special termination benefits and the guidance in paragraph [715-30-35-95](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-95) relating to the determination of the change in the projected benefit obligation due to the related curtailment. ##### [715-30-55-227](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-227) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:249e9871259231b2b19d2903db775965752b0591f8699d3b28c91de34828aed5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In this Example, an employer's pension plan has a transition obligation remaining in accumulated other comprehensive income, and there are no retroactive pension plan amendments after that date. On May 11, 20X0, the employer offers for a short period of time (until June 13, 20X0) special benefits to its employees in connection with their voluntary termination of employment (special termination benefits). An additional 5 years of service will be credited, and eligibility for early retirement benefits will be granted for employees who are age 50 or older with more than 20 years of service and who elect to retire. Normal early retirement is at age 55. The special termination benefits (increased pension benefits) together with the employee's regular pension benefits will be paid directly from plan assets. ##### [715-30-55-228](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-228) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:78250d43f9057047740f408be726f7a3dffd04ff844a4750c84717c5c57ceb13 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. On June 13, 20X0, employees representing 15 percent of the work force accept the offer of special termination benefits. For those employees, the actuarial present value of their accumulated pension benefits assuming they terminated at that date without the special termination benefits is $525,000, and the actuarial present value of their accumulated pension benefits with the special termination benefits is $625,000. None of the employees accepting the offer of special termination benefits are otherwise eligible for early retirement benefits under the pension plan. ##### [715-30-55-229](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-229) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:ea3f82df62cee526350a906686eb6cc772d26769a2f257fd6a993ea278836ff8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The portion of the projected benefit obligation based on the future compensation levels of the terminated employees is $80,000, and all terminated employees are fully vested in their accumulated pension benefits. The portion of the transition obligation remaining in accumulated other comprehensive income assigned to the years of service no longer expected from the terminated employees is $150,000. ##### [715-30-55-230](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-230) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:49af1102a614663c30dec65b0758bb814258742580f0389891d4abc8a30f5764 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [715-30-35-94](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-94) provides guidance that requires that if the sum of the effects resulting from a curtailment is a net loss, that loss is recognized in earnings when it is probable that a curtailment will occur and the effects described are reasonably estimable. In this Example, the effects resulting from the curtailment are not reasonably estimable until June 13, 20X0, the acceptance date for the offer of special termination benefits. As a result, the employer recognizes as of June 13, 20X0, a loss of $170,000 that includes the cost of the special termination benefits and the net loss from the curtailment determined as follows (in thousands). - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-DCFA3C39-F885-424C-AB66-2D68FF874BAC-low.gif) "June 13, 20X0" Before Employee Terminations Effects of Terminations After Employee Terminations Assets and obligations: Vested benefit obligation Employees accepting offer $(525) $(100) (a) $(625) Other employees (775) (775) Nonvested benefits (200) (200) Accumulated benefit obligation " (1,500)" (100) " (1,600)" Effect of future compensation levels (500) 80 (b) (420) Projected benefit obligation " (2,000)" (20) " (2,020)" Plan assets at fair value " 1,400 " " 1,400 " Funded status and recognized liability $(600) $(20) $(620) "Amounts recognized in accumulated other comprehensive income:" Transition obligation $800 $(150) (c) $650 Net gain (300) (300) $500 $(150) (d) $350 (a) The loss from acceptance of the special termination benefits is $100 ($625 - $525). (b) "Paragraph 715-30-35-94 requires that any curtailment gain be first offset against any existing loss included in other comprehensive income. Because that existing amount is a gain of $300 (the net gain included in accumulated other comprehensive income), the $80 gain from the curtailment is recognized in earnings." (c) "Paragraph 715-30-35-93 specifies that a transition obligation remaining in accumulated other comprehensive income is treated as prior service cost for purposes of applying the guidance in the Settlements, Curtailments, and Certain Termination Benefits Subsections of this Subtopic. The reduction of prior service cost included in accumulated other comprehensive income associated with the previously expected years of service of the terminated employees is $150." (d) "The loss recognized in earnings is $170, which includes the cost of the special termination benefits of $100, the gain related to the absence of future compensation of $80, and the recognition of a portion of the transition obligation remaining in accumulated other comprehensive income of $150. The journal entry to account for the employee terminations follows." Loss on employee terminations $170 Other comprehensive income-transition obligation $150 Pension liability 20 ##### [715-30-55-231](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-231) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:9c5225fab0c83c0d26018697efdb5035677a7113996835f3cb7dfd7cf18b566c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the accounting for a curtailment following the guidance in the Settlements, Curtailments, and Certain Termination Benefits Subsection of Section 715-30-35. Each of the two Cases in this Example represents an entity that sponsors final-pay noncontributory defined benefit plans. The Cases differ based on whether there was a retroactive plan amendment after transition to the accounting required under this Subtopic and whether there was a transition obligation or a transition asset remaining in accumulated other comprehensive income at the date of the curtailment as follows: 1. a Curtailment with a transition obligation and a retroactive plan amendment (Case A) 2. b Curtailment with a transition asset (Case B). ##### [715-30-55-232](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-232) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:d986f5a04b58bf3e35c6e9177b22e31d3bdb989a507a28ef60033bc399921b6e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Case illustrates the accounting for a plan curtailment in which there was a transition obligation remaining in accumulated other comprehensive income at the date of the curtailment and there had been a retroactive plan amendment after Entity A adopted the accounting requirements of this Subtopic. On January 1, 20X0, the entity had a retroactive plan amendment resulting in $800,000 of prior service cost. On December 31, 20X1, the management of Entity A committed itself to a formal plan to dispose of a component of an entity. In connection with the disposal, the number of employees accumulating benefits under the plan would be reduced significantly. The portion of the projected benefit obligation based on the expected future compensation levels of the terminated employees was $90,000, and nonvested benefits of the terminated employees amounted to $20,000. The plan also had a transition obligation remaining in accumulated other comprehensive income that is treated as prior service cost included in accumulated other comprehensive income under the guidance in paragraph [715-30-35-92](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-92). The remaining expected future years of service associated with those employees present at the date of transition was reduced by 30 percent due to the termination of employees. Accordingly, 30 percent of the transition obligation remaining in accumulated other comprehensive income at December 31, 20X1, was a loss that amounted to $120,000. ##### [715-30-55-233](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-233) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:c82bb7b6a90b92240e37b5e54cbafc34ce99c4551c6c0b6595f29da4e61f664e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The prior service cost included in accumulated other comprehensive income (which relates to the plan amendment of January 1, 20X0) associated with the previously expected years of service of the terminated employees that will not be rendered was a loss which amounted to $160,000. The sum of the effects resulting from the plan curtailment was a loss of $170,000 recognized in earnings, determined as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-B813DF3A-556F-45B4-84BE-E80768CF9F74-low.gif) Entity A (in thousands) Before Curtailment Effect of Curtailment After Curtailment Assets and obligations: Vested benefit obligation " $(1,300)" " $(1,300)" Nonvested benefits (200) $20 (180) Accumulated benefit obligation " (1,500)" 20 " (1,480)" Effects of projected future compensation levels (500) 90 (410) Projected benefit obligation " (2,000)" 110 (a) " (1,890)" Plan assets at fair value: " 1,400 " " 1,400 " Funded status and recognized liability $(600) $110 $(490) "Amounts recognized in accumulated other comprehensive income:" Transition obligation (b) $400 $(120) (b) $280 Prior service cost resulting from plan amendment (c) 651 (160) (c) 491 Net gain (151) (151) $900 $(280) $620 (a) "Under paragraph 715-30-35-94, the gain (that is, the decrease in the projected benefit obligation) resulting from the curtailment is first offset against any existing net loss included in accumulated other comprehensive income. Because the amount included in accumulated other comprehensive income in this Case was a gain of $151, the $110 gain from the curtailment was recognized in earnings." The journal entry required to reflect the recognition of the curtailment gain in earnings follows. Pension liability 110 Curtailment gain 110 (b) "Because the plan had a transition obligation remaining in accumulated other comprehensive income, that amount is treated as prior service cost included in accumulated other comprehensive income for purposes of applying this Subtopic's guidance. The remaining expected future years of service associated with those employees present at the date of transition was reduced by 30 percent due to the termination of employees. Accordingly, 30 percent of the transition obligation included in accumulated other comprehensive income at the date of the curtailment was recognized in earnings, which amounted to $120." The journal entry required to reflect the recognition of the transition obligation in earnings follows. Curtailment loss 120 Other comprehensive income-transition obligation 120 (c) "The prior service cost included in accumulated other comprehensive income (which related to the plan amendment of January 1, 20X0) associated with the previously expected years of service of the terminated employees that will not be rendered was $160. That amount was recognized in earnings." The journal entry required to reflect the recognition of the prior service cost in earnings follows. Curtailment loss 160 Other comprehensive income-prior service cost 160 ##### [715-30-55-234](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-234) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:47b8219a0c29d10537cb61b2b18ddb4a2b0479331d22cbd7b8718cbaf2cfaab5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Case illustrates the accounting for a plan curtailment in which there was a transition asset remaining in accumulated other comprehensive income at the date of the curtailment. In this Case, there had not been a retroactive plan amendment after Entity B adopted the accounting requirements of this Subtopic. On July 27, 20X2, the management of Entity B decided to reduce significantly the operations of a line of business products. Although that decision did not result in closing down any facilities, it required the termination of a significant number of employees. The termination of employees took place on November 1, 20X2. ##### [715-30-55-235](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-235) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:65e6d196b590ff48d7185ad20ecfa424b225c938d18d3d9b108bc4c4895147fd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The portion of the projected benefit obligation based on expected future compensation levels of the terminated employees was $90,000, and the portion of nonvested benefits related to the terminated employees was $20,000. As a result, Entity B recognized a gain of $110,000 on November 1, 20X2. Following the guidance in paragraphs [715-30-35-92 through 35-95](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-92) , Entity B estimated at July 27, 20X2, that a net curtailment gain would result. Accordingly, the gain was recognized on the date employees terminated (November 1, 20X2) and was based on plan assets and obligations measured as of that date. The gain was determined as follows. - ![](https://asc.understandingaccounting.org/asc-img/GUID-95480C6A-7C9B-4673-8A61-22FF446A6D70-low.gif) Entity B (in thousands) "As of November 1, 20X2" Before Realization of Curtailment Gain Effect of Curtailment After Realization of Curtailment Gain Assets and obligations: Vested benefit obligation " $(1,300)" " $(1,300)" Nonvested benefits (300) $20 (280) Accumulated benefit obligation " (1,600)" 20 " (1,580)" Effects of projected future compensation levels (400) 90 (310) Projected benefit obligation " (2,000)" 110 (a) " (1,890)" Plan assets at fair value " 2,100 " " 2,100 " Funded status and recognized asset $(100) $110 $(210) Amounts recognized in accumulated other comprehensive income: Transition asset (a) $(200) $- (a) $(200) Net loss 100 - (a) 100 $(100) $- $(100) (a) "Following the guidance in paragraph 715-30-35-94, the net amount included in accumulated other comprehensive income was a gain of $100 (net loss included in accumulated other comprehensive income of $100 plus the transition asset remaining in accumulated other comprehensive income of $200). Because the net amount included in accumulated other comprehensive income was a gain, the $110 gain from curtailment was recognized in earnings. If the previously existing net amount included in accumulated other comprehensive income had been a loss including the transition asset remaining in accumulated other comprehensive income and that loss exceeded the curtailment gain, the curtailment gain would have been offset, and no gain would have been recognized in earnings. The journal entry required to reflect the accounting for the plan curtailment follows." Pension asset $110 Gain from curtailment $110 ##### [715-30-55-236](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-236) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:a0d114901c3218e6e9360b7f1e77ed7f822b89c634be435c468e786c89db8da9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the guidance in paragraph [715-30-55-133](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-133). In this Example there is a termination of a pension plan in one period followed by the settlement of the plan in another period. There is no successor pension plan. ##### [715-30-55-237](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-237) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:92282fb5abd70006662c10cbdd584904e23e216e8e43e136385ad88b56780b57 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. On July 20, 20X1, an employer formally amends its pension plan to provide for its termination. Employees cease to accrue additional pension benefits as of November 30, 20X1 (the effective date of the pension plan termination), and pension benefits are not to be provided under a successor pension plan. On January 30, 20X2, upon receipt of the appropriate regulatory approvals for termination of the pension plan, nonparticipating annuity contracts are purchased to settle the accumulated benefit obligation of $1,650,000 as of that date (nonvested pension benefits become vested upon termination of the pension plan), and the employer withdraws excess plan assets. The pension plan ceases to exist. ##### [715-30-55-238](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-238) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:8df859c086160cb71b638306970007690f43a64879ea370526ff31eaaa222296 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The portion of the projected benefit obligation at July 20, 20X1, based on future compensation levels beyond November 30, 20X1, is $400,000. As a result, the employer recognizes a curtailment gain of $400,000 as of July 20, 20X1, the date of the pension plan amendment. The employer recognizes a settlement gain of $550,000 as of January 30, 20X2, the date of the settlement. The following two tables indicate the determination of the effects of the curtailment and the settlement. Because the effect of the curtailment is a gain, that gain is recognized pursuant to paragraphs [715-30-35-92 through 35-94](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-92) and [715-30-55-184](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-184) when the pension plan amendment is adopted (July 20, 20X1) and is based on plan assets and the projected benefit obligation measured as of that date. - Table 1- The Curtailment (in thousands) - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-AE6D27B2-ED0C-49E9-A746-18CF2A6F87A2-low.gif) "July 20, 20X1" Before Curtailment Effect of Curtailment After Curtailment Assets and obligations: Accumulated benefit obligation " $(1,480)" " $(1,480)" Effect of future compensation levels (420) $400 (a) (20) Projected benefit obligation " (1,900)" 400 " (1,500)" Plan assets at fair value " 2,100 " " 2,100 " Funded status and recognized asset $200 $400 $600 Net gain recognized in accumulated other comprehensive income $(500) $(500) (a) "The effect of future compensation levels beyond November 30, 20X1, ceases to be part of the projected benefit obligation when the amendment to terminate the pension plan is adopted. Pursuant to paragraph 715-30-35-94, the gain (that is, the decrease in the projected benefit obligation) resulting from the curtailment is first offset against any net loss included in accumulated other comprehensive income. Because the amount included in accumulated other comprehensive income is a gain in earnings of $500, the $400 gain from the curtailment is recognized in earnings. The journal entry to account for the curtailment follows." Pension asset $400 Gain from curtailment $400 - Table 2- The Settlement (in thousands) - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-D4EB630D-C512-4341-BE8C-29E1A47BFEC5-low.gif) "January 20, 20X2" Before Settlement Effect of Settlement After Settlement Assets and obligations: "Projected benefit obligation (equals accumulated and vested benefit obligation)" " $(1,650)" " $1,650 " (a) $- Plan assets at fair value " 2,300 " " (1,650)" (a) - (650) (b) Funded status and recognized asset $650 $(650) $- "Net gain recognized in accumulated other comprehensive income" $(550) $550 (c) $- (a) "The vested benefit obligation of $1,650 is settled by using plan assets of an equal amount to purchase nonparticipating annuity contracts." (b) Plan assets in excess of the amount used to settle the vested benefit obligation are withdrawn from the pension plan. (c) "A pro rata amount of the maximum gain of $550 is recognized in earnings due to a settlement. The projected benefit obligation is reduced from $1,650 to $0, a reduction of 100 percent. Accordingly, 100 percent of the maximum gain is recognized in earnings. The journal entry to account for the settlement and withdrawal of excess plan assets follows." Cash $650 Other comprehensive income-net gain 550 Gain from settlement $550 Pension asset 650 ##### [715-30-55-239](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-239) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:5a9cf21118ab452af95a8e84389abd2002dffc7eeabcb4d5969fa81472bebbe7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the guidance in paragraph [715-30-55-197](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-197) relating to the accounting for a curtailment and a settlement that occur in connection with a sale of a component of an entity. The following Cases present: 1. a Curtailment and settlement recognized in different interim periods (Case A) 2. b Curtailment and settlement recognized in the same interim period (Case B). ##### [715-30-55-240](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-240) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:4ee691efd14c9646d3fc54994121218cccf4abe0fa8bfa56dc8ff857de84c940 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Cases A and B initially share the following assumptions. ##### [715-30-55-241](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-241) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:d7cdc386010ba96a8d36d5bc5cb8cc7563f5a9aa5934c4ed78f7dc7200cc7529 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. On January 1, 20X1, an employer adopts a retroactive pension plan amendment that results in $800,000 of prior service cost. ##### [715-30-55-242](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-242) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:efa1b20d94eb2e66377ffbd7c4910e53971a56001ac972fc0538232b51c1352e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. During the second quarter of 20X2, the employer determines that it is probable that it will sell a component of the entity. The employer estimates that the sale will occur by year-end. However, all the criteria in paragraphs [205-20-45-1A through 45-1D](https://asc.understandingaccounting.org/asc/205/20/#205-20-45-1A) necessary to report discontinued operations are not satisfied during the second quarter. The employer estimates that the prior service cost included in accumulated other comprehensive income related to the pension plan amendment of January 1, 20X1, and associated with the previously expected years of service of the terminated employees that will not be rendered is a loss of $160,000. That estimate needs no revision on December 31, 20X2. ##### [715-30-55-243](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-243) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:98707a1da722dec985226345f274742b5efcd5508e66309d95c1eb60d7d4575c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. During the third quarter of 20X2, the employer enters into an agreement with a December 31, 20X2, closing date to sell the component. On December 31, 20X2 (disposal date), the employer sells the component at a $100,000 profit before considering the following pension-related effects. ##### [715-30-55-244](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-244) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:76ccf2f40346136785c42ec9f1fe126fdf63d5b260629a9e68fb0440bb939ead Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. All of the following occur in connection with the sale: 1. a Certain employees cease to be employed by the selling employer, which results in a significant reduction in the number of present employees accumulating pension benefits under the selling employer's pension plan (Plan A). 2. b The terminated employees are hired by the acquiring employer. 3. c The acquiring employer, through its pension plan (Plan B), agrees to assume the accumulated benefit obligation ($200,000) related to the terminated employees. 4. d Plan assets of $250,000 ($200,000 for the settlement of the accumulated benefit obligation and $50,000 as an excess contribution) are transferred from Plan A to Plan B. ##### [715-30-55-245](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-245) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:93692915ef1e79b8d9db54f4affd121b10903c28e3bdfe6b82aa844e33c4381e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The portion of the projected benefit obligation based on future compensation levels of the terminated employees is $75,000. ##### [715-30-55-246](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-246) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:b647b9cf008cd03d189cb5eaf1cc2c5e8942268a9115de055bc804136a0556e8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The sum of the pension-related effects resulting from the sale is a net loss of $26,000 recognized in earnings as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-6E6D54B9-0A73-4526-9EB3-1CE6ADC53917-low.gif) Curtailment net loss (recognized in earnings during second quarter of 20X2): Prior service cost included in accumulated other comprehensive income associated with terminated employees " $160,000 " Reduction in projected benefit obligation " (75,000)" " $85,000 " "Settlement gain (recognized in earnings on December 31, 20X2):" Portion of transition asset remaining in accumulated other comprehensive income " (82,000)" Portion of net gain included in accumulated other comprehensive income " (27,000)" " (109,000)" "Transfer of plan assets in excess of the accumulated benefit obligation (recognized in earnings on December 31, 20X2)" " 50,000 " " $26,000 " ##### [715-30-55-247](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-247) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:35d010059b4ac8b186d2a279b306aea3294f99b11bec3998bfe86977bb7f3b0d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Case illustrates the accounting for the curtailment and the settlement in different interim periods. ##### [715-30-55-248](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-248) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:e168518e3159a577b06df97455b960ac3a0539f716130aa09206e0c44f7494e0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Because the employer determined in the second quarter of 20X2 that it was probable that the component would be sold, the curtailment loss should be recognized in earnings in that quarter. However, because the employer had not satisfied all the criteria in paragraphs [205-20-45-1A through 45-1D](https://asc.understandingaccounting.org/asc/205/20/#205-20-45-1A) for reporting discontinued operations in that quarter, the curtailment loss would be reclassified to discontinued operations as part of restating the second quarter. Appropriate disclosures should be made regarding the plan curtailment in accordance with Section 715-20-50 on defined benefit plans. The following table presents the determination of the effects of the curtailment. - Table 1—The Curtailment (in thousands) - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-97618D8C-AA15-4D86-9726-77C71A58BA29-low.gif) Before Sale Curtailment-Related Effects Resulting from Sale After Curtailment Assets and obligations: Accumulated benefit obligation " $(1,500)" " $(1,500)" Effect of future compensation levels (500) $75 (a) (425) Projected benefit obligation " (2,000)" 75 " (1,925)" Plan assets at fair value " 2,400 " " 2,400 " Funded status and recognized asset $400 $75 $475 Amounts recognized in accumulated other comprehensive income: Transition asset $(790) $(790) Prior service cost 651 $(160) (b) 491 Net gain (261) (261) $(400) $(160) (c) $(560) (a) "Paragraph 715-30-35-94 requires that any curtailment gain be first offset against any existing loss included in other comprehensive income. Because that existing amount is a gain of $1,051 ($261 net gain included in accumulated other comprehensive income plus the $790 transition asset remaining in accumulated other comprehensive income), the $75 gain from the curtailment is recognized in earnings." (b) "The reduction of prior service cost included in accumulated other comprehensive income (which relates to the pension plan amendment of January 1, 20X1) associated with the previously expected years of service of the terminated employees that will not be rendered is $160." (c) The journal entry to account for the curtailment follows. Loss from curtailment $85 Pension asset 75 Other comprehensive income-prior service cost $160 ##### [715-30-55-249](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-249) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:bd3e50725531aecf9a53df3796d698e2bf89aa2fc4f19c1d6fc0f4f59000ee05 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Because the settlement occurred on December 31, 20X2, the gain from the settlement is recognized in earnings on that date and classified in discontinued operations. Appropriate disclosures should be made regarding the settlement of the pension obligation in accordance with Section 715-20-50. The following table presents the determination of the effects of the settlement. - Table 2 -The Settlement (in thousands) - ![](https://asc.understandingaccounting.org/asc-img/GUID-9C5FE47E-77C9-4AEA-8C8B-44A0FDA2638F-low.gif) "December 31, 20X2" After Curtailment Settlement- Related Effects Resulting from Sale After Sale Assets and obligations: Accumulated benefit obligation " $(1,500)" $200 (a) " $(1,300)" Effects of future compensation levels (425) (425) Projected benefit obligation " (1,925)" 200 " (1,725)" Plan assets at fair value " 2,400 " (250) (a) " 2,150 " Funded status and recognized asset $475 $(50) $425 "Amounts recognized in accumulated other comprehensive income:" Transition asset $(790) $82 (b) $(708) Prior service cost 491 491 Net gain (261) 27 (b) (234) $(560) $109 $(451) (a) "The accumulated benefit obligation of $200 is settled by transferring plan assets of an equal amount to the acquiring employer. In addition, the selling employer agrees to transfer an additional $50 of plan assets. The journal entry to account for the transfer of plan assets and the accumulated benefit obligation to Plan B as part of the sale follows." Gain on sale $50 Pension asset $50 Plan A's journal entry to account for the transfer of plan assets and the accumulated benefit obligation to Plan B follows. Accumulated benefit obligation $200 Withdrawal of excess plan assets 50 Plan assets $250 (b) "A pro rata amount of the maximum gain of $1,051 ($261 net gain included in accumulated other comprehensive income plus the $790 transition asset remaining in accumulated other comprehensive income) is recognized in earnings due to the settlement. The projected benefit obligation is reduced from $1,925 ($2,000 less the $75 curtailment gain) to $1,725, a reduction of 10.4 percent (rounded) due to the settlement. Accordingly, 10.4 percent of the maximum gain ($109 rounded) is recognized in earnings. The journal entry to account for the settlement follows." Other comprehensive income-transition asset $82 Other comprehensive income-net gain 27 Gain from settlement $109 ##### [715-30-55-250](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-250) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:0b5be82538fa5beea787b65413a9ecba0d3c30e46257377d2a587e4621467a42 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Case illustrates the accounting for the curtailment and the settlement in the same interim period. ##### [715-30-55-251](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-251) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:d49114be78bb831378cda56e9fcbf37c6ec72dbb4cf3de6e63a9ebc71d7f3ead Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For this Case, assume the same facts as Case A except that before the fourth quarter of 20X2, the employer did not expect to sell or otherwise dispose of the component of the entity. ##### [715-30-55-252](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-252) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:12.073Z to 2026-09-10T01:00:12.073Z Record version: sha256:b0f18f780e943459a326f9dc5ffec3f3aa525675f7cdf8ea3803661fffea6754 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In this Case the determination of the curtailment loss and the settlement gain is the same as that presented in Case A, Tables 1 through 2 (see paragraphs [715-30-55-248 through 55-249](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-248) ). However, both the curtailment loss and the settlement gain should be recognized in earnings in the fourth quarter of 20X2 and reported in discontinued operations pursuant to Subtopic 205-20. Source downloaded (UTC): 2026-09-10T01:00:15.090Z to 2026-09-10T01:00:15.090Z Record version: sha256:e2233d951d46ac12ce1493bc1cb80b9ec88a5d11ebe4b9997e58c4a022466f6d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 715-30-60: 60 Relationships [Read section](https://asc.understandingaccounting.org/asc/715/30/#60-relationships) SEC content: no #### Comprehensive Income ##### [715-30-60-1](https://asc.understandingaccounting.org/asc/715/30/#715-30-60-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:15.090Z to 2026-09-10T01:00:15.090Z Record version: sha256:32994ecebebcdcd5cac91954acd97aa780360a381527678642c7a783363ee920 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For the required display and reporting in comprehensive income of information about gains or losses associated with pension or other postretirement [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."), prior [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.") costs or credits associated with pension or other postretirement benefits, and transition assets or obligations associated with pension or other postretirement benefits, see Subtopic 220-10. #### Inventory ##### [715-30-60-2](https://asc.understandingaccounting.org/asc/715/30/#715-30-60-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:15.090Z to 2026-09-10T01:00:15.090Z Record version: sha256:96f5ed18a03f6152bb5788f11c9dc2719102620f097ba3a4d48a3cee623e9c0b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on the capitalization of the service cost component 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.") as part of the cost of inventory, see Subtopic 330-10. #### Exit or Disposal Cost Obligations ##### [715-30-60-3](https://asc.understandingaccounting.org/asc/715/30/#715-30-60-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:15.090Z to 2026-09-10T01:00:15.090Z Record version: sha256:542eebb4a36b407690bb637452c94d92ea7368228ace587a5a599f1a61ac04b8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For the required accounting associated with one-time termination benefits provided to current employees that are involuntarily terminated under the terms of a one-time benefit arrangement, see Subtopic 420-10. ##### [715-30-60-4](https://asc.understandingaccounting.org/asc/715/30/#715-30-60-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:15.090Z to 2026-09-10T01:00:15.090Z Record version: sha256:96d09c5917fed88722dcd40795a34f2df2e251dca86f503b44b06fe780c6b563 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on whether additional termination benefits should be considered one-time termination benefits and accounted for under Subtopic 420-10 or be considered an enhancement to an ongoing benefit arrangement and, therefore, subject to the provisions of either this Topic or Subtopic 712-10, see Subtopic 420-10. #### Income Taxes ##### [715-30-60-5](https://asc.understandingaccounting.org/asc/715/30/#715-30-60-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:15.090Z to 2026-09-10T01:00:15.090Z Record version: sha256:4ba3db7384f45105683eb7bc05207eaf0e9caa0493db61a85f4c1bfd19afa2e3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on whether an excise tax incurred by an employer on the withdrawal of excess [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.") from its pension plan should be accounted for as an expense in the period of the withdrawal or as an income tax and deferred if there will be related gains (such as 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.") gain) recognized for financial reporting purposes in subsequent periods, see Subtopic 740-10. #### Business Combinations ##### [715-30-60-6](https://asc.understandingaccounting.org/asc/715/30/#715-30-60-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:15.090Z to 2026-09-10T01:00:15.090Z Record version: sha256:79663f54efb775d9d3f18ed4d24497d9600be7c1842675d6f182e44cd17839bc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For the required pension related accounting for issues arising in connection with a business combination, including plans to terminate certain employees, the measurement of projected benefit obligations and the assignment of the purchase price to individual assets acquired and liabilities assumed, see Subtopic 805-20. #### Consolidation ##### [715-30-60-7](https://asc.understandingaccounting.org/asc/715/30/#715-30-60-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:15.090Z to 2026-09-10T01:00:15.090Z Record version: sha256:9fe645ee04eca8c68ba309768c267a13ade5eba4bfff5ecf41741aeea18a9d0c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on whether to consolidate an employee benefit plan, see Subtopic 810-10. #### Nonmonetary Transactions ##### [715-30-60-8](https://asc.understandingaccounting.org/asc/715/30/#715-30-60-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:15.090Z to 2026-09-10T01:00:15.090Z Record version: sha256:47268e598407171fc2f86a0137516ea55a3a00cc3bebf61e85a67c58831bd00c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For the requirements related to [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.") recognition for the spinoff of pension-related assets or obligations transferred in a spinoff of nonmonetary assets to owners of an entity, see Subtopic 845-10. #### Not-for-Profit Entities ##### [715-30-60-9](https://asc.understandingaccounting.org/asc/715/30/#715-30-60-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:15.090Z to 2026-09-10T01:00:15.090Z Record version: sha256:a51ccd045af191d3243a9f43f1e5a88892b7af9e2ca47992047c3721165897c2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For the required accounting by a not-for-profit employer for the gains or losses and the prior service costs or credits that would be recognized in other comprehensive income under the guidance in the General Subsections of this Subtopic, see Subtopic 958-715. #### Regulated Operations ##### [715-30-60-10](https://asc.understandingaccounting.org/asc/715/30/#715-30-60-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:15.090Z to 2026-09-10T01:00:15.090Z Record version: sha256:ab7e90859724fc7a2dea5f2fc85ea924488955c7179507453885f8ed10038f25 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For treatment by rate regulated entities of the possible difference between net periodic pension cost as defined in the General Subsections of this Subtopic and amounts of pension cost considered for rate-making purposes, see Subtopic 980-715. Source downloaded (UTC): 2026-09-10T01:00:17.448Z to 2026-09-10T01:00:17.448Z Record version: sha256:c8e713865ba0983ac161163450f1cce60531b94ab4db22bc2781050d46962bbb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 715-30-65: 65 Transition and Open Effective Date Information [Read section](https://asc.understandingaccounting.org/asc/715/30/#65-transition-and-open-effective-date-information) SEC content: no ##### [715-30-65-1](https://asc.understandingaccounting.org/asc/715/30/#715-30-65-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:17.448Z to 2026-09-10T01:00:17.448Z Record version: sha256:fd18f51f1efc59ba675b14ff25a5e43fab85f97b93288c8f16857db5ca1609f6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph superseded on 03/23/2010 after the end of the transition period stated in FASB Statement No. 158, _Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans_, and FSP FAS 158-1.