# ASC 715-60-55: Compensation—Retirement Benefits — Defined Benefit Plans—Other Postretirement — 55 Implementation Guidance and Illustrations Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/715/60/#55-implementation-guidance-and-illustrations) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:e5a6ac37294478ca350f523acf4237f5233bbe186128e697bad17004294df8b1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 715-60-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/715/60/#55-implementation-guidance-and-illustrations) SEC content: no #### Implementation Guidance ##### [715-60-55-1](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:4b74c0b72c4ee515d5c271ee27e82932010b3a07b730cce16e4ecc5c4ed14bac Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A collectively bargained defined benefit postretirement health care [plan](https://asc.understandingaccounting.org/glossary/p/#plan "An arrangement that is mutually understood by an employer and its employees, whereby an employer undertakes to provide its employees with benefits after they retire in exchange for their services over a specified period of time, upon attaining a specified age while in service, or a combination of both. A plan may be written or it may be implied by a well-defined, although perhaps unwritten, practice of paying postretirement benefits or from oral representations made to current or former employees. See Substantive Plan.") of a single employer may stipulate that [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.") will be provided for the duration of the collective-bargaining agreement or may imply or explicitly state that benefits are subject to renegotiation upon the expiration of the current collective-bargaining agreement. Past negotiations have resulted in the continuation of the plan, although the plan has been amended at various times. The [accumulated postretirement benefit obligation](https://asc.understandingaccounting.org/glossary/a/#accumulated-postretirement-benefit-obligation "The actuarial present value as of a particular date of all future benefits attributed to an employee's service rendered to that date assuming the plan continues in effect and that all assumptions about future events are fulfilled. The accumulated postretirement benefit obligation generally reflects a ratable allocation of expected future benefits to employee service already rendered in the attribution period. Before an employee's full eligibility date, the accumulated postretirement benefit obligation as of a particular date for an employee is the portion of the expected postretirement benefit obligation attributed to that employee's service rendered to that date; on and after the full eligibility date, the accumulated and expected postretirement benefit obligations for an employee are the same.") should be measured assuming that benefits will be provided beyond the period covered by the current collective-bargaining agreement. Unless the most recently negotiated collective-bargaining agreement explicitly states for the first time that the payment of [postretirement benefits](https://asc.understandingaccounting.org/glossary/p/#postretirement-benefits "All forms of benefits, other than retirement income, provided by an employer to retirees. Those benefits may be defined in terms of specified benefits, such as health care, tuition assistance, or legal services, that are provided to retirees as the need for those benefits arises, such as certain health care benefits, or they may be defined in terms of monetary amounts that become payable on the occurrence of a specified event, such as life insurance benefits.") will be discontinued upon the contract's expiration and that is the expectation of the parties to the agreement, the presumption of an ongoing plan is not overcome by the presence of an expiration date for the present collective-bargaining agreement. ##### [715-60-55-2](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:15b54da5e2aaa2542a83dbd0ef8ade734f96d361ed63ff438d9228bb41dd088f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A defined dollar cap is part of an employer's cost-sharing arrangement under which the employer limits the amount it will spend for retiree benefits by defining the maximum dollar amount for each retiree or the retiree group to be applied by the employer toward the cost of retiree benefits. For example, a plan with a defined dollar cap may stipulate that the employer will pay for all retiree health care costs in a year up to a specified dollar limit. A past practice of regular increases (or decreases) in that defined dollar cap may indicate that the cost-sharing provisions of the [substantive plan](https://asc.understandingaccounting.org/glossary/s/#substantive-plan "The terms of the postretirement benefit plan as understood by an employer that provides postretirement benefits and the employees who render services in exchange for those benefits. The substantive plan is the basis for the accounting for that exchange transaction. In some situations an employer's cost-sharing policy, as evidenced by past practice or by communication of intended changes to a plan's cost-sharing provisions, or a past practice of regular increases in certain monetary benefits, may indicate that the substantive plan differs from the extant written plan.") differ from the extant written plan. Future amendments to a written postretirement health care plan that change the amount of a defined dollar cap can be anticipated as part of the substantive plan if the conditions in paragraphs [715-60-35-51 through 35-55](https://asc.understandingaccounting.org/asc/715/60/#715-60-35-51) are satisfied. ##### [715-60-55-3](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:eb329f715ffb1e9edb9263bee2120b4f738453501a97f14eed1a41731b1e051e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A postretirement health care plan with a defined dollar cap is not considered to be a plan that provides benefits defined in terms of monetary amounts as discussed in paragraph [715-60-35-56](https://asc.understandingaccounting.org/asc/715/60/#715-60-35-56). Changes in monetary benefits provided by one plan or changes in the amount of a defined dollar cap on cost sharing for a different plan may need to be anticipated as part of determining what the substantive plans are. However, the nature of the promises for the two plans differs. Benefits for the first plan are defined in monetary amounts, for example, a stipulated dollar amount of life insurance coverage, whereas benefits offered under the defined dollar capped plan are not defined in monetary amounts. Although the cap on the employer's contribution is defined in monetary terms, the benefits are the specified eligible medical claims with payment by the employer being no greater than the amount of that cap. Changes in the types of benefits or the types of health care costs covered by a plan cannot be anticipated. ##### [715-60-55-4](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:5959e4cecdc511b8d713112bd7bd2263264b0224e110fb2b10a072c6f160295f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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.") used to measure an employer's postretirement benefit obligation may be the same rates used to measure its pension benefit obligation under Subtopic 715-30 or they may not be for various reasons. Differences could occur between the discount rates used to measure the pension benefit obligation and the discount rates used to measure the postretirement benefit obligation. For example, the expected timing of postretirement benefit payments may differ from the expected timing of pension benefit payments. Those differences could occur particularly if the participants in each plan are different. In addition, rates implicit in current prices of annuity contracts might be used to measure the pension benefit obligation, and no similar contracts may be available to settle the postretirement benefit obligation (see paragraphs [715-20-55-1 through 55-2](https://asc.understandingaccounting.org/asc/715/20/#715-20-55-1) ). ##### [715-60-55-5](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:197e3aa1ba1ca53f56981a71d4a2af1fe8a70d72657338730f8a8600d2dc8682 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An employer sponsors a health care plan that provides benefits to both active employees and pre-age-65 [retirees](https://asc.understandingaccounting.org/glossary/r/#retirees "Collectively, that group of plan participants that includes retired employees, their beneficiaries, and covered dependents."). The plan requires active employees and retirees to contribute to the plan. The contributions of active employees may be used to reduce the employer's cost of providing benefits to retirees , but only if the amount contributed by active employees over their service periods exceeds the cost of providing their health care benefits while they are employed and the employer has no obligation to refund that excess. In that case, the excess would be applied to reduce the cost of the retirees' benefits. If active employee contributions do not exceed the cost of active benefits, the full amount of the active employees' contributions should be applied to the cost of their active benefits. The cost of providing health care benefits to active employees should be measured assuming only active employees are covered by the plan. ##### [715-60-55-6](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:76b5f52d66aca75587f71de93b1fa686505df1e2022b615e10c3a5a94e5088b2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An employer has a contributory health care plan covering active employees and retirees under which retirees pay 100 percent of the average cost of benefits determined based on the combined experience of active employees and retirees. The employer pays all of the remaining cost. The active employees do not contribute to the plan. Under this arrangement, the employer has an obligation under this Subtopic if the actual cost of providing benefits to the retirees is greater than their contributions. In that case, the employer is subsidizing a portion of the cost of the retirees' benefits. See paragraph [715-60-35-97](https://asc.understandingaccounting.org/asc/715/60/#715-60-35-97). Thus, the employer would have an obligation for the difference between the expected cost of providing the retirees' benefits and the retirees' expected contributions, whether those contributions are established at 100 percent of the average cost or at a lesser amount. ##### [715-60-55-7](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:c95c50050e2204fefeb0fa298e26ef9edf7c86cec8faffa860d08b45925c8aac Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For a plan that stipulates that the benefit to be provided is the payment of retirees' health care claims, the cost of premiums for insurance that an employer expects to purchase to finance its obligation may be used to measure the obligation if it produces a reasonable estimate of the future cost of benefits covered by the plan. In some situations, such as in a community-rated insurance plan that provides the type of benefits covered by the employer's plan and in which the premium cost to the employer is based on the experience of all participating employers, the claims experience of a single employer generally will have little impact on its premiums. Accordingly, in those situations a projection of future premiums based on the current premium structure and expected changes in the general level of health care costs may provide a reasonable estimate of the employer's obligation. However, if premiums are adjusted for the actual claims experience or the age and sex of the plan's participants (an experience-rated plan), the foregoing projection of the employer's obligation may not produce a reasonable estimate of the future cost of the underlying benefits of the plan. ##### [715-60-55-8](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:d519b9e980a1b324e5cfd33777418bedcca597a5d7b1202ec77c573d8dee24d8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An employer that has measured its postretirement health care benefit obligation by projecting the cost of premiums for purchased health care insurance has not reduced or eliminated the applicability of any provisions of this Subtopic. The employer should follow this Subtopic in its entirety including calculating and disclosing the components of [net periodic postretirement benefit cost](https://asc.understandingaccounting.org/glossary/n/#net-periodic-postretirement-benefit-cost "The amount recognized in an employer's financial statements as the cost of a postretirement benefit plan for a period. Components of net periodic postretirement benefit cost include service cost, interest cost, actual return on plan assets, gain or loss, amortization of prior service cost or credit, and amortization of the transition obligation or asset."), which would still include service cost for active employees and interest cost. ##### [715-60-55-9](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:07236edd754dbca519bd9c5ea198b0c2145dcd7a54d02711b3832a13d8c4f9d0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When determining its postretirement benefit obligation , an employer should assume a trend of decreasing (or increasing) [Medicare reimbursement rates](https://asc.understandingaccounting.org/glossary/m/#medicare-reimbursement-rates "The health care cost reimbursements expected to be received by retirees through Medicare as mandated by currently enacted legislation. Medicare reimbursement rates vary by the type of benefits provided.") (for example, certain health care costs may have increased by 15 percent last year but Medicare may have only covered a smaller increase, which increased the employer's or retirees' share of the cost of benefits) only if those changes result from currently enacted legislation or regulations. For instance, to the extent that certain coverage under Medicare changes as a result of applying a legislated formula or historical administrative practice, an employer should consider the effects of those changes in projecting Medicare coverage in future years. Doing so may result in a higher or lower amount of coverage. Future legislation that would change the portion of costs covered by Medicare should not be anticipated even though a historical trend of those changes may be apparent. ##### [715-60-55-10](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:7e291f8494fa44a6a4d051c57cf1d41b2c3db822c889e92fdf8b958d1c1eaef0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An employer modifies the eligibility requirements under its [postretirement benefit plan](https://asc.understandingaccounting.org/glossary/p/#postretirement-benefit-plan "See Plan.") by changing the plan's [credited service period](https://asc.understandingaccounting.org/glossary/c/#credited-service-period "Employee service period for which benefits are earned pursuant to the terms of the plan. The beginning of the credited service period may be the date of hire or a later date. For example, a plan may provide benefits only for service rendered after a specified age. Service beyond the end of the credited service period does not earn any additional benefits under the plan. See Attribution Period.") from 25 years of service after age 40 to 15 years of service after both reaching age 50 and rendering 10 years of service. Under the amended plan, the [attribution period](https://asc.understandingaccounting.org/glossary/a/#attribution-period "The period of an employee's service to which the expected postretirement benefit obligation for that employee is assigned. The beginning of the attribution period is the employee's date of hire unless the plan's benefit formula grants credit only for service from a later date, in which case the beginning of the attribution period is generally the beginning of that credited service period. The end of the attribution period is the full eligibility date. Within the attribution period, an equal amount of the expected postretirement benefit obligation is attributed to each year of service unless the plan's benefit formula attributes a disproportionate share of the expected postretirement benefit obligation to employees' early years of service. In that case, benefits are attributed in accordance with the plan's benefit formula. See Credited Service Period.") begins at the date of hire because the plan has an undefined credited service period. The amended plan still requires 25 years of credited service. However, it grants credit for 10 years of service before age 50 and those years of service are not defined. The effect of the change in eligibility requirements is to lengthen 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.") period for employees hired before age 40. ##### [715-60-55-11](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:5caf33262471c171793490bb354fbabc2fed2b86312e94171fe23d41fee83794 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An employer provides retiree health care and life insurance benefits under one plan. Employees are eligible for health care and death benefits upon attaining age 55 and having rendered 20 years of service; however, the life insurance benefits are based on final pay. Basing the life insurance benefits on final pay extends the [full eligibility date](https://asc.understandingaccounting.org/glossary/f/#full-eligibility-date "The date at which an employee has rendered all of the service necessary to have earned the right to receive all of the benefits expected to be received by that employee (including any beneficiaries and dependents expected to receive benefits). Determination of the full eligibility date is affected by plan terms that provide incremental benefits expected to be received by or on behalf of an employee for additional years of service, unless those incremental benefits are trivial. Determination of the full eligibility date is not affected by plan terms that define when benefit payments commence or by an employee's current marital or dependency status.") to a plan participant's expected retirement date, provided the incremental increase in the life insurance benefits offered under the plan for an employee's service after age 55 is not trivial in relation to the total benefits expected to be received by the employee under that plan. For example, if an employee is expected to fulfill the 20-year service requirement before age 55 and is expected to retire at age 62 with salary increases in all years of service, the employee's full eligibility date is the date he or she reaches age 62. Note that the plan described has an indefinite credited service period, because the qualifying 20-year period is unspecified. Accordingly, the attribution period for that plan begins at the date of hire and ends on the full eligibility date. ##### [715-60-55-12](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:ab017ac94f20ef9e089f828653bd4ed43615b2c4352d4e7113ba4a7d5fe1b59e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Moreover, even if the terms of the plan described in paragraphs [715-60-55-10 through 55-11](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-10) specified which 20-year service period constituted the credited service period, for example, the first 20 years after date of hire, or the first 20 years of service after age 35, basing life insurance benefits on final pay would still extend the full eligibility date to the expected date of retirement, again, assuming the incremental life insurance benefits after the defined 20 years of service are nontrivial. If the plan formula specifies the first 20 years as the credited service period, the employer needs to assess whether that results in a frontloaded benefit as described in paragraph [715-60-35-62](https://asc.understandingaccounting.org/asc/715/60/#715-60-35-62). If that provision results in a frontloaded benefit, the benefit obligation should not be attributed ratably to each year of service in the attribution period but should be attributed in accordance with the plan's [benefit formula](https://asc.understandingaccounting.org/glossary/b/#benefit-formula "The basis for determining benefits to which participants may be entitled under a postretirement benefit plan. A plan's benefit formula specifies the years of service to be rendered, age to be attained while in service, or a combination of both that must be met for an employee to be eligible to receive benefits under the plan. A plan's benefit formula may also define the beginning of the credited service period and the benefits earned for specific periods of service."). ##### [715-60-55-13](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:884489f66622e15b61cf96ab919a3e1a56eb98489b1388a392629464e88c5015 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. However, the attribution period for the plan described in paragraphs [715-60-55-10 through 55-11](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-10) would be different if the benefits are provided and accounted for under two separate plans, one providing life insurance benefits and the other providing health care benefits. In that case, the full eligibility date for participants in the life insurance plan would not influence the determination of the full eligibility date for participants in the health care plan. A frontloaded plan may provide two or more benefits, such as health care and life insurance benefits, that are earned under different benefit formulas. For example, assume the typical participant covered by the plan described in paragraphs [715-60-55-10 through 55-11](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-10) is an individual hired at age 20 who is expected to retire at age 62 with 42 years of service. If the [expected postretirement benefit obligation](https://asc.understandingaccounting.org/glossary/e/#expected-postretirement-benefit-obligation "The actuarial present value as of a particular date of the postretirement benefits expected to be paid by the employer's plan to or for each employee, the employee's beneficiaries, and any covered dependents pursuant to the terms of the plan.") at age 40 for that employee is $39,405 ($28,500 for health care benefits and $10,905 for life insurance benefits), a ratable (1/42) allocation of the expected postretirement benefit obligation to each year of service would result in an accumulated postretirement benefit obligation of $18,764 ($13,571 for health care benefits and $5,193 for life insurance benefits) at the end of the 20th year. However, if the plan's benefit formulas for both health care and life insurance benefits stipulate that employees are not required to render additional service after their first 20 years in order to receive those benefits, the aggregate benefits under the plan may be frontloaded, even though life insurance benefits increase for additional years of service beyond the 20th year. See the following calculations: 1. a $10,915 equals 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 life insurance benefits based on final pay, assuming the employee was hired at a salary of $15,000 that increases by 5 percent annually, a life expectancy of 75 years, and a discount rate of 7 percent. 2. b 20/42 x $39,405 = $18,764. 3. c 20/42 x $28,500 = $13,571. 4. d 20/42 x $10,905 = $5,193. ##### [715-60-55-14](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-14) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:3075c2f0d7794a8171788c5de8bfe5b6abe49de4093039b6f0e5128850115793 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the combined values of both health care and life insurance benefits earned based on their respective benefit formulas after 20 years are significantly greater than the accumulated postretirement benefit obligation that would result from a ratable allocation of the expected postretirement benefit obligation, a disproportionate share of the expected postretirement benefit obligation is attributable under the benefit formulas to the employee's early years of service. In that case, the attribution of the obligation for both benefits under the plan should follow their respective benefit formulas. Following the benefit formulas in this example, the accumulated postretirement benefit obligation for health care and for life insurance benefits for the hypothetical employee at the end of 20 years is $28,500 and $3,728, respectively. Accordingly, the accumulated postretirement benefit obligation for that employee at the end of the first 20 years of service should be $32,228 rather than $18,764; that is, the plan is frontloaded and benefits should be attributed following the benefit formula. (Assumed life insurance benefit equal to Year 20 salary of $39,799 discounted at 7 percent for 35 years = $3,728.) ##### [715-60-55-15](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-15) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:bd19dc697b6e835a2fef68a532012552a6cfa9e3594cc7f5a1fc722680b1e604 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An employer has a retiree health care plan that bases benefits on length of service and requires employees to render a minimum of 10 years of service after attaining age 45 to be eligible for any benefits. However, upon attaining age 45, employees receive credit for 3 percent of the maximum benefit for each year of service before age 45. For example, at age 45 an employee hired at age 25 receives credit for 60 percent (3 percent x 20 years) of the plan's [postretirement health care benefits](https://asc.understandingaccounting.org/glossary/p/#postretirement-health-care-benefits "A form of postretirement benefit provided by an employer to retirees for defined health care services or coverage of defined health care costs, such as hospital and medical coverage, dental benefits, and eye care."). The credited service period begins at the date of hire because the amount of total benefits is based on the years of service rendered after that date. ##### [715-60-55-16](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-16) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:61dd47478342e9bccb051dc0fa6cf948c733185f0b01332f8a247e97532384d9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An employer requires an employee to participate in its contributory active health care plan to be eligible to participate in its retiree health care plan. An employee can join the active plan at any time before retirement but must have worked 10 years and attained age 55 while in service to be eligible for benefits under the retiree plan. The attribution period for an employee who is or is expected to be a participant in the active plan begins at the date of hire because the plan's eligibility requirements do not specify which 10 years of service must be rendered in exchange for the benefits. That an employee must participate in the contributory active plan does not affect the determination of the attribution period. However, an employee would not be considered a [plan participant](https://asc.understandingaccounting.org/glossary/p/#plan-participant "Any employee or former employee who has rendered service in the credited service period and is expected to receive employer-provided benefits under the postretirement benefit plan, including benefits to or for any beneficiaries and covered dependents. See Active Plan Participant.") if the employer expects that the employee will never contribute to the active plan and, therefore, will not be eligible to participate in the retiree plan. ##### [715-60-55-17](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-17) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:efb2e8f053a1cc8c94ef618c82884659e9b6d5ab5ad90498d7ac2fafc4d78083 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An employer's annual accrual for the service cost component of net periodic postretirement benefit cost should generally relate to only those employees who are in their credited service periods. However, if the credited service period begins later than the date of hire and is considered nominal relative to the employees' average total expected years of service to full eligibility, employees expected to receive benefits under the retiree plan should be considered plan participants at the date of hire, and the expected obligation for their benefits should be accrued from that date. ##### [715-60-55-18](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-18) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:6f0bd074e8416bd7505e5ec2ab75ae88b4785a23d78388c985b42f23148d141c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In determining the attribution period, judgment is required to determine whether a credited service period is nominal. Generally, a nominal credited service period is a period that is very short compared to employees' average total expected years of service before full eligibility. ##### [715-60-55-19](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-19) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:4a750906b89ec28635d2fcb644a6434d1b06a216e0eb9edb293b8061793d074a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An employer's previous accounting for postretirement benefits has considered the written plan to be the substantive plan. On July 1, 20X1, its board of directors approves a negative [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.") (that is, an amendment that reduces benefits attributable to prior service) that will be effective on January 1, 20X3. The employer intends to announce the negative plan amendment to plan participants on July 1, 20X2. The effects of the negative plan amendment should be accounted for as of July 1, 20X2, when it is communicated to plan participants and not as of July 1, 20X1, the date of the board's approval. The amendment in this instance will not be communicated within a reasonable period of time after its adoption. Therefore, the extant unamended written plan continues to be the substantive plan that should be accounted for because it represents the last plan whose terms were mutually understood by the employer and the plan participants. ##### [715-60-55-20](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-20) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:f85b9e456f31305f7e7f2e6a299bbff937ae7c5acbcfde2d6ea5deaef114954a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. It is important to distinguish between a reduction in the accumulated postretirement benefit obligation caused by a negative plan amendment and a reduction caused by a curtailment. Unless the plan is being terminated, a reduction in the accumulated postretirement benefit obligation caused by a negative plan amendment that exceeds any [transition obligation](https://asc.understandingaccounting.org/glossary/t/#transition-obligation "The amount, as of the date Subtopic 715-60 was initially applied, of the accumulated postretirement benefit obligation in excess of the fair value of plan assets plus any recognized accrued postretirement benefit cost or less any recognized prepaid postretirement benefit cost.") or [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 is not immediately recognized as a reduction of current postretirement benefit costs. ##### [715-60-55-21](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-21) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:5e2dc99465333725e1efbdeca7323ab1b4218251200ba774a66b0e0a012782b1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An employer adopts an amendment to its postretirement health care plan that has the dual effect of expanding the plan's coverage and increasing the deductible. The increase in the deductible should not be measured and recognized separately from the benefit improvement. If a plan amendment results in numerous changes to a plan that both increase and decrease benefits attributed to prior service, the net effect of all those changes should be considered at the same time to determine whether there has been a net positive or negative plan amendment. If the combined effect of all the changes is a net increase in benefits (a positive plan amendment), the resulting prior service cost should be accounted for in accordance with paragraphs [715-60-35-16 through 35-17](https://asc.understandingaccounting.org/asc/715/60/#715-60-35-16) or paragraph [715-60-35-18](https://asc.understandingaccounting.org/asc/715/60/#715-60-35-18). If the combined effect is a net decrease in benefits (a negative plan amendment), the effect should be accounted for in accordance with paragraph [715-60-35-20](https://asc.understandingaccounting.org/asc/715/60/#715-60-35-20). ##### [715-60-55-22](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-22) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:aa250715a5437b1ff0d62f7165b275ece451266b759dd17146e366ad9a0b966f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An employer sponsors a contributory postretirement health care plan that has an annual limitation on the dollar amount of the employer's share of the cost of benefits (a defined dollar capped plan). The cap on the employer's share of annual costs and the retirees' contribution rates are increased 5 percent annually. Any amount by which incurred claims costs exceed the combined employer and retiree contributions is initially borne by the employer but is passed back to retirees in the subsequent year through supplemental retiree contributions for that year. In 20X1, incurred claims costs exceed the combined employer and retiree contributions requiring a supplemental retiree contribution in 20X2. The employer decides in 20X2 to absorb the excess that arose in 20X1 rather than pass it on to the retirees. The employer should recognize as a component of net periodic postretirement benefit cost the loss due to that temporary deviation from the substantive plan. The employer should recognize the loss as a component of net periodic postretirement benefit cost in 20X2 when it makes the decision to deviate from the substantive plan. ##### [715-60-55-23](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-23) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:bd51a15e02de8a395d17f0ce0b8ce538412471478e791839c765e97fd0f10b98 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An employer previously projected that health care costs under a defined dollar capped plan would exceed the cap in 20X1 but actual claims in that year do not exceed the cap. The resulting gain should not be recognized immediately as a component of net periodic postretirement benefit cost in 20X1 in accordance with paragraphs [715-60-35-34 through 35-35](https://asc.understandingaccounting.org/asc/715/60/#715-60-35-34) . ##### [715-60-55-24](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-24) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:c43d825fab62e72604a1c2cce0b9d566854405c28534b7809d37c23b01d994be Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The change in the accumulated postretirement benefit obligation due to experience different from that assumed results in a [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.") that should be recognized in accumulated other comprehensive income in accordance with paragraphs [715-60-35-23 through 35-25](https://asc.understandingaccounting.org/asc/715/60/#715-60-35-23) . Paragraphs [715-60-35-34 through 35-35](https://asc.understandingaccounting.org/asc/715/60/#715-60-35-34) addresses the recognition of a temporary deviation from provisions of the substantive plan that increases or decreases the employer's share of the benefit costs incurred in the current or past periods. A situation that would result in a gain or loss that should be recognized immediately as a component of net periodic postretirement benefit cost is one in which an employer has a past practice of changing the cap to reduce its share of expenses such that that practice constitutes the cost-sharing provision of the substantive plan. If, as a result of perceived economic adversity affecting the retiree population, the employer decides in 20X1 and for that year alone not to change the cap to further reduce its share of expenses in 20X1 as had been anticipated in the substantive plan, that action would give rise to a loss that would be required to be recognized immediately as a component of net periodic postretirement benefit cost in 20X1. ##### [715-60-55-25](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-25) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:badba776aab5c7e35b405aa1796b876b73aa2a277395435b2dbaa82348b20e37 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A gain that would be recognized immediately as a component of net periodic postretirement benefit cost in accordance with paragraphs [715-60-35-34 through 35-35](https://asc.understandingaccounting.org/asc/715/60/#715-60-35-34) would occur if participants voluntarily agreed to bear a one-time higher share of costs for a past or current period. For example, if retirees agreed to make a contribution to the plan in one year that is larger than the contribution amount called for by the plan and future contributions would comply with the existing terms of the plan, the employer would recognize immediately as a component of net periodic postretirement benefit cost a one-time gain for the excess of the new retiree contribution amount over the old retiree contribution amount. ##### [715-60-55-26](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-26) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:c6df24c2e7129c8ab24f08564b8ec3ea98df4ac78a4efcbd719f3fb830c355e7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a trust arrangement explicitly provides that segregated assets are available to satisfy claims of creditors in bankruptcy, such a provision would effectively permit those assets to be used for other purposes at the discretion of the employer. It is not necessary to determine that a trust is bankruptcy-proof for the assets of the trust to qualify as [plan assets](https://asc.understandingaccounting.org/glossary/p/#plan-assets "Assets—usually stocks, bonds, and other investments (except certain insurance contracts as noted in paragraph 715-60-35-109)—that have been segregated and restricted (usually in a trust) to be used for a health and welfare plan (which can include active, terminated, and retired employees or their dependents or beneficiaries). The amount of plan assets includes amounts contributed by the employer, and by plan participants for a contributory plan, and amounts earned from investing the contributions, less benefits, income taxes, and other expenses incurred. 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. Securities of the employer held by the plan are includable in plan assets provided they are transferable. 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 the employer may intend that those assets be used to provide health and welfare benefits, which may include postretirement benefits. Those assets shall be accounted for in the same manner as other employer assets of a similar nature and with similar restrictions. If a plan has liabilities other than for benefits, those nonbenefit obligations are considered as reductions of plan assets. Amounts accrued by the employer but not yet paid to the plan are not plan assets. If a trust arrangement explicitly provides that segregated assets are available to satisfy claims of creditors in bankruptcy, such a provision would effectively permit those assets to be used for other purposes at the discretion of the employer. It is not necessary to determine that a trust is bankruptcy-proof for the assets of the trust to qualify as plan assets. However, assets held in a trust that explicitly provides that such assets are available to the general creditors of the employer in the event of the employer's bankruptcy would not qualify as plan assets.") under this Subtopic. Assets held in a trust that explicitly provides that such assets are available to the general creditors of the employer in the event of the employer's bankruptcy would not qualify as plan assets under this Subtopic. ##### [715-60-55-27](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-27) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:5cdbf2f937420af149a64f5fdbe31418eb3a662777d004ba80063af3f5a1109d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An employer may not include in plan assets the assets of a rabbi trust. The assets of a rabbi trust do not qualify as plan assets because they are explicitly available to the employer's creditors in the event of bankruptcy. ##### [715-60-55-28](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-28) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:6a390d75f739d7151f5edd747d12857732fd059dc03911624c96bab1c5f93fc1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An employer that issues its own debt or equity securities directly to its postretirement benefit trust may include those securities as plan assets under this Subtopic provided the securities are currently transferable. To be transferable the securities held by the postretirement benefit trust must be legally and unconditionally transferable to unrelated third parties at any time, for any reason, and without economic penalties. Thus, the trustee of the postretirement benefit trust must have the unilateral right and ability to legally and unconditionally sell, transfer, or otherwise dispose of the securities. Securities that are not transferable in their present state do not meet the transferability requirement even though they can be converted into securities that are transferable or can otherwise be made transferable through other means, such as through future registration of the securities for trading in a public market. For example, if an employer issues to its postretirement benefit trust nontransferable convertible preferred stock that can be converted into transferable common stock of the employer, the convertible preferred stock would not meet the criterion of currently transferable and, thus, would not be included in plan assets. ##### [715-60-55-29](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-29) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:5b4a1adbede93349d1016f3647727b87a822fd14c0487c9d104b9b57b66ff5ad Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An employer has two legally separate postretirement benefit plans. Both plans are unfunded defined benefit plans covering the same employees. One plan provides postretirement medical care and the other provides postretirement dental care. An employer that has two or more such plans is permitted, but not required, to account for those plans as a single plan. The last sentence of paragraph [715-60-35-130](https://asc.understandingaccounting.org/asc/715/60/#715-60-35-130) reinforces the criterion that the plans must be unfunded. ##### [715-60-55-30](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-30) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:7df12a29686faee6b9e5a2db2079aa1c901a704d4336d92ef83478189a44f8cf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. It would be appropriate for the employer in the preceding paragraph to change from one-plan accounting to two-plan accounting; that is, to accounting for each plan separately if the conditions of paragraph [715-60-35-130](https://asc.understandingaccounting.org/asc/715/60/#715-60-35-130) are no longer satisfied. If the change is elective (that is, it is made even though the conditions of that paragraph are still satisfied), the employer would have to demonstrate the preferability of the change in accounting to satisfy the requirements of Subtopic 250-10, and its effects would be accounted for in accordance with that Subtopic. ##### [715-60-55-31](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-31) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:784e8c430a588877f6e52375cdcd0287f6ca68650c412431e75bc25d156b4307 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [715-60-55-32](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-32) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:a5b2b6b0fd009e04a5fc2356bff9534fc0bb492e5b5f399a47b4b460c683fb8d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Any assets of the defined contribution plan described in paragraph [715-70-55-3](https://asc.understandingaccounting.org/asc/715/70/#715-70-55-3) that have not yet been allocated to participants' individual accounts do not reduce the accumulated postretirement benefit obligation of the defined benefit plan. The terms of the defined benefit plan require the payment of benefits that exceed those payable using participants' individual account balances in the defined contribution plan. Pursuant to those terms, assets of a defined contribution plan that have not yet been allocated to participants' individual accounts do not reduce the employer's present obligation under the defined benefit plan. ##### [715-60-55-33](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-33) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:fe290f69620b1877a3cd2e708d252cc0c03fda7da0518d2383b804c1ed543684 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Although an employer's intent may be to allocate the unallocated assets in the future so that participants can use those assets to pay health care costs, that intent is insufficient to offset the present defined benefit plan obligation. When the unallocated assets in the defined contribution plan are allocated, the benefits payable under that plan are increased and the obligation of the defined benefit plan is reduced. That reduction is recognized immediately in determining the net periodic postretirement benefit cost for the defined benefit plan. ##### [715-60-55-34](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-34) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:74e4b5382ed8e02e803958ea22aa69b208e8102e65cbdf956add22f6712d612e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Because the two plans are legally separate and, thus, the assets of one plan are not available to pay the benefits of the other, neither the allocated nor the unallocated assets of the defined contribution plan would be considered plan assets of the defined benefit plan. ##### [715-60-55-35](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-35) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:33404723887d867b8d4fc0f21cee6292efc2e7fb483ebf0f3cfee82d439c9ff4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following illustrates the notion of the expected postretirement benefit obligation and the relationship between that obligation and the accumulated postretirement benefit obligation at various dates. ##### [715-60-55-36](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-36) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:96cec99e7b1647368b4385f893dc4fe15f7b34f1850b09c3e3e8ec0bd811fce5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entity A's plan provides postretirement health care benefits to all employees who render at least 10 years of service and attain age 55 while in service. A 50-year-old employee, hired January 1, 20X3, at age 30 and eligible for benefits upon attaining age 55, is expected to terminate employment at age 62 and is expected to live to age 77. A discount rate of 8 percent is assumed. ##### [715-60-55-37](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-37) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:b07952873488acfba85ab0b5115e77935469603eb4bc22c984e12378a35df0d7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. At December 31, 20Z2, Entity A estimates the expected amount and timing of benefit payments for that employee as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-8FF7F2B2-380C-4BD7-91E4-79A1115394D6-low.gif) Expected Future Claims Present Value at Age Age 50 53 55 63 " $2,796 " " $1,028 " " $1,295 " " $1,511 " 64 " 3,093 " " 1,052 " " 1,326 " " 1,547 " 65 856 270 339 396 66 947 276 348 406 67 " 1,051 " 284 357 417 68 " 1,161 " 291 366 427 69 " 1,282 " 297 374 436 70 " 1,425 " 306 385 449 71 " 1,577 " 313 394 460 72 " 1,744 " 321 404 471 73 " 1,934 " 329 415 484 74 " 2,137 " 337 424 495 75 " 2,367 " 346 435 508 76 " 2,620 " 354 446 520 77 " 3,899 " 488 615 717 " $28,889 " " $6,292 " " $7,923 " " $9,244 " ##### [715-60-55-38](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-38) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:7c2ccd6c0fcfb6307881c961d0652114392ee8783b8ab563d2fbba2d624cfb74 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The expected and accumulated postretirement benefit obligations at December 31, 20Z2 (age 50) are $6,292 and $5,034 (20/25 of $6,292), respectively. An equal amount of the expected postretirement benefit obligation is attributed to each year of service from the employee's date of hire to the employee's full eligibility date (age 55) (see paragraphs [715-60-35-62 through 35-66](https://asc.understandingaccounting.org/asc/715/60/#715-60-35-62) ). Therefore, when the employee is age 50, the accumulated postretirement benefit obligation is measured as 20/25 of the expected postretirement benefit obligation, as the employee has rendered 20 years of the 25-year credited service period. See paragraphs [715-60-55-40 through 55-56](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-40) for additional guidance on the full eligibility date and paragraphs [715-60-55-57 through 55-59](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-57) for additional guidance on attribution. ##### [715-60-55-39](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-39) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:d7df911cb3a39d4db9b1769b642438fe2d7ec2b2e7c3e2538fdba078a24531cc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assuming no changes in health care costs or other circumstances, the accumulated postretirement benefit obligation at December 31, 20Z5 (age 53), is $7,289 (23/25 of $7,923). At the end of the employee's 25th year of service and thereafter, the expected postretirement benefit obligation and the accumulated postretirement benefit obligation are equal. In this Example, at December 31, 20Z7, when the employee is 55 and fully eligible for benefits, the accumulated and expected postretirement benefit obligations are $9,244. At the end of the 26th year of service (December 31, 20Z8) when the employee is 56, those obligations are $9,984 ($9,244 plus interest at 8 percent for 1 year). ##### [715-60-55-40](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-40) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:7e54779cc22ebd15ef511245addc24718497c59e53f55f227e0beb40cd0657c5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [715-60-55-41 through 55-56](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-41) are presented to assist in understanding the [full eligibility date](https://asc.understandingaccounting.org/glossary/f/#full-eligibility-date "The date at which an employee has rendered all of the service necessary to have earned the right to receive all of the benefits expected to be received by that employee (including any beneficiaries and dependents expected to receive benefits). Determination of the full eligibility date is affected by plan terms that provide incremental benefits expected to be received by or on behalf of an employee for additional years of service, unless those incremental benefits are trivial. Determination of the full eligibility date is not affected by plan terms that define when benefit payments commence or by an employee's current marital or dependency status."). ##### [715-60-55-41](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-41) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:1b33a836c13e56dcd052a77048b78035740bbc0ea7d779fbbe6a0dba5b7eddcb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Some plans have benefit formulas that define different benefits for different years of service. ##### [715-60-55-42](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-42) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:519b49e16b5c5e2ab5352a40df419911eb09896cbd1c79adcaaf530ec7e1869a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To illustrate, assume a plan in which the percentage of postretirement health care coverage to be provided by an employer is defined by groups of years of service. The plan provides 20 percent postretirement health care coverage for 10 years of service after age 35, 50 percent for 20 years of service after age 35, 70 percent for 25 years of service after age 35, and 100 percent for 30 years of service after age 35. The full eligibility date for an employee who was hired at age 35 and is expected to retire at age 62 is at age 60. At that date the employee has rendered 25 years of service after age 35 and is eligible to receive a benefit of 70 percent health care coverage after retirement. The employee receives no additional benefits for the last two years of service. ##### [715-60-55-43](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-43) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:ebc06dc729991a825d82429a903211f0f3534d68ced445522b8c6e11e0a47541 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Some plans may base the amount of benefits or level of benefit coverage on employees' compensation, for example, as a percentage of their final pay. To the extent the plan's postretirement benefit formula defines benefits wholly or partially as a function of future compensation (that is, the plan provides incremental benefits for additional years of service when it is assumed that final pay will increase), determination of the full eligibility date or an employee is affected by those additional years of service the employee is expected to render. ##### [715-60-55-44](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-44) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:c275b15e8756423c23a95b0c6d97a0fe1f1e860eebc08ecebe36d4d4b7bc6971 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In addition, measurements of the postretirement benefit obligation and service cost reflect the best estimate of employees' future compensation levels (see paragraphs [715-60-35-88 through 35-89](https://asc.understandingaccounting.org/asc/715/60/#715-60-35-88) ). ##### [715-60-55-45](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-45) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:475d8677653b5fd6c7a4714a0c370c6e8a504285c1b91eb0f73aae596789c641 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For example, assume a plan provides life insurance benefits to employees who render 20 years of service and attain age 55 while in service; the benefit is equal to 20 percent of final pay. A 55-year-old employee, who currently earns a salary of $90,000, has worked 22 years for the entity. The employee is expected to retire at age 60 and is expected to be earning $120,000 at that time. The employee is eligible for life insurance coverage under the plan at age 55, when the employee has met the age and service requirements. However, because the employee's salary continues to increase each year, the employee is not fully eligible for benefits until age 60 when the employee retires because the employee earns an incremental benefit for each additional year of service beyond age 55. That is, the employee earns an additional benefit equal to 20 percent of the increase in salary each year from age 55 to retirement at age 60 for service during each of those years. ##### [715-60-55-46](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-46) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:8bf041d00a88f2c11a68d385f6c70a2b72f01dd366c5b2bfa6e01b30117e6c01 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Some postretirement benefit plans provide spousal or dependent coverage or both if the employee works a specified number of years beyond the date at which the employee attains eligibility for single coverage. ##### [715-60-55-47](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-47) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:d7ee0b80f4e91b2afe74e45674bf940bf05f56f251e1b3cf77355dd57863f634 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For example, a postretirement health care plan provides single coverage to employees who work 10 years and attain age 50 while in service; the plan provides coverage for dependents if the employee works 20 years and attains age 60 while in service. Because the additional 10 years of service may provide an incremental benefit to employees, for employees expected to satisfy the age and service requirements and to have covered dependents during the period following the employee's retirement, their full eligibility date is the date at which they have both rendered 20 years of service and attained age 60 while in service. For employees not expected to have covered dependents after their retirement or who are not expected to render at least 20 years of service or attain age 60 while in service, or both, their full eligibility date is the date at which they have both rendered 10 years of service and attained age 50 while in service. ##### [715-60-55-48](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-48) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:61de7afc59971838f96fe6ed9c1cfaad039f743076929f2c64286979ff49ec8c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Some postretirement benefit plans may have different eligibility requirements for different types of benefits. ##### [715-60-55-49](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-49) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:adb7e22b8d95f53a3e642ac6681b7444f288004e23a1baa172086c6d53bf7677 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For example, assume a plan provides a postretirement death benefit of $100,000 to employees who render 20 or more years of service. Fifty percent health care coverage is provided to eligible employees who render 10 years of service, 70 percent coverage to those who render 20 years of service, and 100 percent coverage to those who render 30 years of service. Employees are eligible for the health care and death benefits if they attain age 55 while in service. ##### [715-60-55-50](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-50) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:764eed9c12fcc583b9d8292f3006bc4a0cbc5108d94dc4f4769ceb20e04ba50b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The full eligibility date for an individual hired at age 30 and expected to terminate employment at age 62 is the date on which that employee has rendered 30 years of service and attained age 55 while in service (age 60 in this example). At that date the employee is eligible for all of the benefits expected to be paid to or on behalf of that employee under the postretirement benefit plan ($100,000 death benefits and 100 percent health care coverage). The full eligibility date for an employee hired at age 37 and expected to retire at age 62 is the date on which that employee has rendered 20 years of service and attained age 55 while in service (age 57 in this example). At that date the employee is eligible for all of the benefits expected to be paid to or on behalf of that employee under the postretirement benefit plan ($100,000 death benefits and 70 percent health care coverage). ##### [715-60-55-51](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-51) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:06a9cbcef1ab28c7001387c5f11d86b66deaf878cf361a3c5526adcd33df6f93 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Some postretirement benefit plans provide coverage for the spouse to whom an employee is married when the employee terminates service; that is, the marital status of an employee upon termination of employment determines whether single or spousal coverage is to be provided. ##### [715-60-55-52](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-52) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:609f193d6fbd5ab8e52da9017a98e75c873e88fcf90becb853f1bfb27366a905 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In measuring the expected postretirement benefit obligation, consideration is given to factors such as when benefit coverage will commence, who will receive benefits (employee and any covered dependents), and the expected need for and utilization of benefit coverage. ##### [715-60-55-53](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-53) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:88055428fbf9571150ad9aba32bc21961126f3b3466354b423fb89b1382def3c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For example, assume a plan provides postretirement health care coverage to employees who render at least 10 years of service and attain age 55 while in service; health care coverage also is provided to employees' spouses at the date of the employees' retirement. A 55-year-old employee is single, has worked for the entity for 30 years, and is expected to marry at age 59 and to retire at age 62. Although the employee is entitled to spousal coverage only if married at retirement, at age 55 the employee has earned the right to spousal coverage. The probability that the employee will be married when the employee retires is included in the actuarial [assumptions](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.") developed to measure the expected postretirement benefit obligation for that plan participant. The full eligibility date (age 55 in this example) is not affected by that measurement assumption. ##### [715-60-55-54](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-54) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:06a24b0172f04805d1e5642751c0b91bff5c87b2656b5f6993f6d385aa500c59 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Some plans provide postretirement benefits to disabled employees. ##### [715-60-55-55](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-55) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:8fa59a892355c10e2fccedfcdcfa4e1e8df547b5a4d9e25513e2651e8f621875 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For example, Entity B provides disability income and health care benefits to employees who become disabled while in service and have rendered 10 or more years of service. Retiree health care benefits are provided to employees who render 20 or more years of service and attain age 55 while in service. Employees receiving disability benefits continue to accrue credit toward their eligibility for retiree health care benefits. Under this plan, an employee hired at age 25, who becomes permanently disabled at age 40, is entitled to receive retiree health care benefits commencing at age 55 (in addition to any disability income benefits commencing at age 40) because that employee worked for Entity B for more than 10 years before becoming disabled. Under the terms of the plan the employee is given credit for working to age 55 even though no actual service is rendered by the employee after the disabling event occurs. ##### [715-60-55-56](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-56) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:cdfc7700f31562b56bafe6112b90ab0738986855bf4530de2275588e04858799 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Because the employee is permanently disabled, the full eligibility date is accelerated to recognize the shorter period of service required to be rendered in exchange for the retiree health care benefits—in this case the full eligibility date is age 40, the date of the disabling event. For a similar employee who is temporarily disabled at age 40 but returns to work and attains age 55 while in service, the full eligibility date is age 55. Entity B's expected postretirement benefit health care obligation for the permanently disabled employee is based on the employee's expected health care costs commencing at age 55 and is attributed ratably to that employee's active service to age 40. ##### [715-60-55-56A](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-56A) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:2e5eeef4c137a9af17e9cdad710420d6407e7de7cf567eb9169638618b64812a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following illustrates the guidance in paragraphs [715-60-35-61 through 35-70](https://asc.understandingaccounting.org/asc/715/60/#715-60-35-61) related to attribution. ##### [715-60-55-57](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-57) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:63c089123bdcb905c71e5c439a551bb1bd067c198b4bcb21bdf504b1a5dc2f40 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A plan that provides benefit coverage to employees who render 30 or more years of service or who render at least 10 years of service and attain age 55 while in service, without specifying when the credited service period begins, the expected postretirement benefit obligation is attributed to service from the date of hire to the earlier of the date at which a plan participant has rendered 30 years of service or has rendered 10 years of service and attained age 55 while in service. However, for a plan that provides benefit coverage to employees who render at least 20 years of service after age 35, the expected postretirement benefit obligation is attributed to a plan participant's first 20 years of service after attaining age 35 or after the date of hire, if later than age 35. ##### [715-60-55-58](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-58) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:c104935e62d58f5bb3b8cb1a27cce57eefaa437979199998b3255f963b3c6746 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A plan with a benefit formula that defines 100 percent benefit coverage for service for the year in which employees attain age 60 has a 1-year credited service period. If plan participants are expected to have rendered an average of 20 years of service at age 60, the credited service period is nominal in relation to their total years of service before their full eligibility dates. In that case, the service cost is recognized from date of hire to age 60. ##### [715-60-55-59](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-59) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:e93fa18908dd316c9839ace6ea455485c86337b2273591634aa5be0d0d9674aa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An example of a frontloaded plan is a life insurance plan that provides postretirement death benefits of $250,000 for 10 years of service after age 45 and $5,000 of additional death benefits for each year of service thereafter up to age 65 (maximum benefit of $300,000). For plans that frontload the benefit, the expected postretirement benefit obligation is attributed to employee service in accordance with the plan's benefit formula (see paragraph [715-60-35-62](https://asc.understandingaccounting.org/asc/715/60/#715-60-35-62)). In this example, the actuarial present value of a $25,000 death benefit is attributed to each of the first 10 years of service after age 45, and the actuarial present value of an additional $5,000 death benefit is attributed to each year of service thereafter up to age 65. #### Illustrations ##### [715-60-55-60](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-60) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:dffd5dd613a87dcf8327903c1f4cc99c613256f9b6416ed21f8d2c97bc1d1ecc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Throughout these Examples the accumulated postretirement benefit obligation and service cost are assumed as inputs rather than calculated based on some underlying population. For simplicity, benefit payments are assumed to be made at the end of the year, service cost is assumed to include interest on the portion of the expected postretirement benefit obligation attributed to the current year, and interest cost is based on the accumulated postretirement benefit obligation as of the beginning of the year. For unfunded plans, benefits are assumed to be paid directly by the employer and are reflected as a reduction in the liability for postretirement benefits. In many of the cases, application of the underlying concepts has been simplified by focusing on a single employee for purposes of illustration. In practice, the determination of the full eligibility date and the measurement of postretirement benefit cost and obligation are based on employee groups and consider various possible retirement dates and the probabilities associated with retirement at each of those dates. ##### [715-60-55-61](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-61) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:04fa181c3cd5760985c6a3033efb2b1a7d145c2d50fbacfe01625325a7c683f3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following Cases illustrate how events that change the accumulated postretirement benefit obligation are reflected in net periodic postretirement benefit cost and other comprehensive income: 1. a Employer accrual of net periodic postretirement benefit cost (Case A) 2. b Plan amendment that increases benefits (Case B) 3. c Negative plan amendments (Case C) 4. d Change in assumptions (Case D). ##### [715-60-55-62](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-62) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:9288c6ddf2af3c77b1ad17d982d9dd233ba9ab1047a641f125fef5483a2b34c4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The tables in each Case illustrate the effect of changes in assumptions or changes in the plan on measurement of the accumulated postretirement benefit obligation. In each Case, it is assumed that the plan is unfunded. ##### [715-60-55-63](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-63) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:66aa6df3affe1414774e57c18ce047467655d7b04c80b8933f6aa7175e6df9df Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In this Case, benefit payments of $42,000 are made at the end of 20X3. Net periodic postretirement benefit cost and other comprehensive income for 20X3, and changes in the postretirement benefit liability, and accumulated other comprehensive income for 20X3 are summarized as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-09D8A089-E17B-4E4E-893B-28B5A5185ABA-low.gif) Net Periodic Postretirement Benefit Cost Other Comprehensive Income Postretirement Benefit Liability Transition Obligation Remaining in Accumulated Other Comprehensive Income Beginning of year " $(600,000)" " $400,000 " Recognition of components of net periodic postretirement benefit cost: Service cost " $32,000 " " (32,000)" Interest cost (a) " 48,000 " " (48,000)" Amortization of transition obligation (b) " 30,000 " " $(30,000)" " (30,000)" Total net periodic postretirement benefit cost " $110,000 " Total other comprehensive income " $(30,000)" Benefit payments " 42,000 " Net change " (38,000)" " (30,000)" End of year " $(638,000)" " $370,000 " (a) Assumed discount rate of 8% applied to the accumulated postretirement benefit obligation at the beginning of the year. (b) "The transition obligation of $400,000 is amortized on a straight-line basis over the remaining amortization period of approximately 13 years." ##### [715-60-55-64](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-64) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:1bd5479c271543d951a9a660da506cc0e12957edc9ddf2216f091d73e35fcb24 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In this Case, the plan is amended on January 2, 20X4, resulting in a $90,000 increase in the accumulated postretirement benefit obligation. ##### [715-60-55-65](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-65) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:1c72a0831cea11c1b96089770cd6e285de6ca7640ddded220880a86ac056feb2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Benefit payments of $39,000 are made at the end of 20X4. Net periodic postretirement benefit cost and other comprehensive income for 20X4, and changes in the postretirement benefit liability and accumulated other comprehensive income for 20X4 are summarized as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-A7C548D4-AC5A-4EA4-B3A2-0B14685B7623-low.gif) Amounts Remaining in Accumulated Other Comprehensive Income Net Periodic Postretirement Benefit Cost Other Comprehensive Income Postretirement Benefit Liability Transition Obligation Prior Service Cost Beginning of year " $(638,000)" " $370,000 " $- Plan amendment " $90,000 " " (90,000)" " 90,000 " Recognition of components of net periodic postretirement cost: Service cost " $30,000 " " (30,000)" Interest cost (a) " 58,240 " " (58,240)" Amortization of transition obligation " 30,000 " " (30,000)" " (30,000)" Amortization of prior service cost (b) " 9,000 " " (9,000)" " (9,000)" Total net periodic postretirement benefit cost " $127,240 " Total other comprehensive income " $51,000 " Benefit payments " 39,000 " Net change " (139,240)" " (30,000)" " 81,000 " End of year " $(777,240)" " $340,000 " " $81,000 " (a) "Assumed discount rate of 8% applied to the accumulated postretirement benefit obligation at the beginning of the year and to the increase in that obligation for the prior service cost initially recognized in other comprehensive income at the date of the plan amendment \[($638,000 x 8%) + ($90,000 x 8%)\]." (b) "As permitted by paragraph 715-60-35-18, prior service cost of $90,000 is amortized in net periodic postretirement benefit cost on a straight-line basis over the average remaining years of service to full eligibility for benefits of the active plan participants (10 years in this Case)." ##### [715-60-55-66](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-66) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:7fef609f23c28a2d64dd804c1bf7ae60db9ccec6f3c6c3933a72ee1d1bb70f8e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In this Case, the plan is amended on January 4, 20X5, resulting in a $99,000 reduction in the accumulated postretirement benefit obligation. ##### [715-60-55-67](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-67) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:bd472ad6977316696b04e8e197a055f485b71dd8ce9de6f529e4fb794dd35061 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Benefit payments in 20X5 are $40,000. Net periodic postretirement benefit cost and other comprehensive income for 20X5, and the changes in the postretirement benefit liability and accumulated other comprehensive income for 20X5 are summarized as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-0710E829-D8B3-4482-8645-7AED5D8D4CA6-low.gif) Amounts Remaining in Accumulated Other Comprehensive Income Net Periodic Postretirement Benefit Cost Other Comprehensive Income Postretirement Benefit Liability Transition Obligation Prior Service Cost Beginning of year " $(777,240)" " $340,000 " " $81,000 " Plan amendment (a) " $(99,000)" " 99,000 " " (18,000)" " (81,000)" Recognition of components of net periodic postretirement benefit cost: Service cost " $30,000 " " (30,000)" Interest cost (a) " 54,259 " " (54,259)" Amortization of transition obligation (b) " 29,000 " " (29,000)" " (29,000)" Amortization of prior service cost - - - Total net periodic postretirement benefit cost " $113,259 " Total other comprehensive income " $(128,000)" Benefit payments " 40,000 " Net change " 54,741 " " (47,000)" " (81,000)" End of year " $(722,499)" " $293,000 " $- (a) "Assumed discount rate of 8% applied to the accumulated postretirement benefit obligation at the beginning of the year and to the decrease in that obligation at the date of the plan amendment \[($777,240 x 8%) - ($99,000 x 8%)\]." (b) "Transition obligation remaining in accumulated other comprehensive income of $322,000 ($340,000 - $18,000) is amortized on a straight-line basis over the remaining transition period of approximately 11 years." ##### [715-60-55-68](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-68) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:428f5d043ebf0da1a9d1a260a0303e302ded7e147e4effe783cfa69818751b50 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In this Case, the assumed health care cost trend rates are changed at December 31, 20X5, resulting in a $55,000 increase in the accumulated postretirement benefit obligation. ##### [715-60-55-69](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-69) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:b1b4f8ac4626eeb181211a27dc8bd01c1afa129a8a2cb449a738d3656cb26554 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The net loss that results from a change in the health care cost trend rates assumption is reflected immediately in the postretirement benefit liability. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-0F7A149B-5313-49BF-B26A-7EA1E7BFA15A-low.gif) Before Change Loss Recognized in other Comprehensive Income After Change Accumulated postretirement benefit obligation " $(722,499)" " $(55,000)" " $(777,499)" Plan assets at fair value - - Funded status and recognized liability " $(722,499)" " $(55,000)" " $(777,499)" Accumulated other comprehensive income: Net loss $- " $55,000 " " $55,000 " Transition obligation " 293,000 " " 293,000 " " $293,000 " " $55,000 " " $348,000 " ##### [715-60-55-70](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-70) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:7d8b33af00994cb2fafe4dd4a83b9977a13790b08ddf4de8c6f2829eeaa94b10 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Example 4 (paragraphs [715-60-55-96 through 55-102](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-96) ). ##### [715-60-55-71](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-71) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:345325a1c17cd969bde1034b37b33b473a945b676ddab1850045f4ec0ca0c642 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entity H has a postretirement benefit plan that provides benefits to employees who render at least 20 years of service after age 35. On January 2, 20X4, Entity H amends its postretirement benefit plan to increase the lifetime cap on benefits provided, resulting in prior service cost of $750,000 that is initially recognized in other comprehensive income (the increase in the accumulated postretirement benefit obligation as a result of the plan amendment). Cases A and B illustrate the [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 prior service cost included in accumulated other comprehensive income. ##### [715-60-55-72](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-72) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:2ab6fe256da46de1a0c8676613d842279a2251fa3866bc52cdc92da4c99184c5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. At the date of the amendment (January 2, 20X4), Entity H has 165 employees of whom 15 are fully eligible for benefits, 10 are under age 35, and 40 are expected to terminate before becoming eligible for any benefits. Because the 10 employees under age 35 have not met the age requirements to participate in the plan (only service after age 35 is credited) and 40 employees are not expected to receive benefits under the plan, those 50 employees are not considered to be plan participants and, therefore, are excluded from the calculation. The 15 fully eligible plan participants also are excluded from the calculation because they do not have to render any additional service to earn the added benefits. The remaining 100 employees have not yet earned the full amount of the benefits they are expected to earn under the plan. Those employees are expected to become fully eligible for those benefits over the next 20 years. Their remaining years of service to full eligibility for benefits is the basis for amortization of the prior service cost. ##### [715-60-55-73](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-73) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:db1cd4fa0ead4cfac456f3ed46cc220e24d59804bc1b8c752e37c7c32624e3d3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Employees hired after the date of the plan amendment or who attain age 35 after the date of the plan amendment do not affect the amortization nor do revised estimates of remaining years of service, except those due to a curtailment. ##### [715-60-55-74](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-74) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:c0de66d6972f1061e65c0bbc4a3d8918d25ee51c7742c0b4d36985324ad286b2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Schedule 1—Determination of Expected Remaining Years of Service Prior to Full Eligibility as of January 2, 20X4 - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-72C96605-9B69-4E3F-88DE-0EC744F37F0E-low.gif) Year Indiv. Remaining Years of Service Prior to Full Elig. 20X4 20X5 20X6 20X7 20X8 20X9 20Y0 20Y1 20Y2 20Y3 20Y4 20Y5 20Y6 20Y7 20Y8 20Y9 20Z0 20Z1 20Z2 20Z3 Total Remaining Years of Service Prior to Full Elig. A1-A4 1 4 4 B1-B6 2 6 6 12 C1-C5 3 5 5 5 15 D1-D5 4 5 5 5 5 20 E1-E7 5 7 7 7 7 7 35 F1-F5 6 5 5 5 5 5 5 30 G1-G9 7 9 9 9 9 9 9 9 63 H1-H7 8 7 7 7 7 7 7 7 7 56 I1-I5 9 5 5 5 5 5 5 5 5 5 45 J1-J5 10 5 5 5 5 5 5 5 5 5 5 50 K1-K4 11 4 4 4 4 4 4 4 4 4 4 4 44 L1-L8 12 8 8 8 8 8 8 8 8 8 8 8 8 96 M1-M8 13 8 8 8 8 8 8 8 8 8 8 8 8 8 104 N1-N5 14 5 5 5 5 5 5 5 5 5 5 5 5 5 5 70 O1-O4 15 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 60 P1-P3 16 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 48 Q1-Q4 17 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 68 R1-R3 18 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 54 S1-S2 19 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 38 T1 20 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 20 Service Years Rendered 100 96 90 85 80 73 68 59 52 47 42 38 30 22 17 13 10 6 3 1 932 Amortization Fraction 100 96 90 85 80 73 68 59 52 47 42 38 30 22 17 13 10 6 3 1 932 932 932 932 932 932 932 932 932 932 932 932 932 932 932 932 932 932 932 932 ##### [715-60-55-75](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-75) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:077d36832127e2136c541cb2d7ce85e0a47ada0335f31d5396dbd601617d3196 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For example, in 20X4, individuals A1-A4 meet the entity's age and service requirements for full eligibility for the benefits they are expected to receive under the plan. Although it may be expected that those employees will work beyond 20X4, benefits are not attributed to years of service beyond their full eligibility date. See Case B for less complex amortization approaches. ##### [715-60-55-76](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-76) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:072b812950f6b2a044b524b85b8e09ba42250f5ac55deaa778c5b7b9d3e2ded3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Schedule 2—Amortization of Prior Service Cost - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-330AE204-D15B-451D-A5C5-D0D7BBD4A21C-low.gif) Year Beginning-of-Year Balance Amortization Rate Amortization End-of-Year Balance 20X4 " $750,000 " 100/932 " $80,472 " " $669,528 " 20X5 " 669,528 " 96/932 " 77,253 " " 592,275 " 20X6 " 592,275 " 90/932 " 72,425 " " 519,850 " 20X7 " 519,850 " 85/932 " 68,401 " " 451,449 " 20X8 " 451,449 " 80/932 " 64,378 " " 387,071 " 20X9 " 387,071 " 73/932 " 58,745 " " 328,326 " 20Y0 " 328,326 " 68/932 " 54,721 " " 273,605 " 20Y1 " 273,605 " 59/932 " 47,479 " " 226,126 " 20Y2 " 226,126 " 52/932 " 41,845 " " 184,281 " 20Y3 " 184,281 " 47/932 " 37,822 " " 146,459 " 20Y4 " 146,459 " 42/932 " 33,798 " " 112,661 " 20Y5 " 112,661 " 38/932 " 30,579 " " 82,082 " 20Y6 " 82,082 " 30/932 " 24,142 " " 57,940 " 20Y7 " 57,940 " 22/932 " 17,704 " " 40,236 " 20Y8 " 40,236 " 17/932 " 13,680 " " 26,556 " 20Y9 " 26,556 " 13/932 " 10,461 " " 16,095 " 20Z0 " 16,095 " 10/932 " 8,047 " " 8,048 " 20Z1 " 8,048 " 6/932 " 4,828 " " 3,220 " 20Z2 " 3,220 " 3/932 " 2,414 " 806 20Z3 806 1/932 806 - ##### [715-60-55-77](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-77) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:737a1291c4675c3dfd7e00f075a2a7cbe9f2e4c29366b1774d7c7bbd9ee0b7e5 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 more rapidly reduce prior service cost previously recognized in other comprehensive income may be applied if used consistently (see paragraph [715-60-35-18](https://asc.understandingaccounting.org/asc/715/60/#715-60-35-18)). For example, if Entity H (in Case A) elects to use straight-line amortization of prior service cost over the average remaining years of service before full eligibility for benefits of the [active plan participants](https://asc.understandingaccounting.org/glossary/a/#active-plan-participant "Any active employee who has rendered service during the credited service period and is expected to receive benefits, including benefits to or for any beneficiaries and covered dependents, under the postretirement benefit plan. See Plan Participant.") (932 future service years/100 employees = 9.32 years), the amortization would be as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-6D168134-82D0-4712-90C8-B99D97EEF5DF-low.gif) Year Beginning-of- Year Balance Amortization End-of-Year Balance 20X4 " $750,000 " " $80,472 " (a) " $669,528 " 20X5 " 669,528 " " 80,472 " " 589,056 " 20X6 " 589,056 " " 80,472 " " 508,584 " 20X7 " 508,584 " " 80,472 " " 428,112 " 20X8 " 428,112 " " 80,472 " " 347,640 " 20X9 " 347,640 " " 80,472 " " 267,168 " 20Y0 " 267,168 " " 80,472 " " 186,696 " 20Y1 " 186,696 " " 80,472 " " 106,224 " 20Y2 " 106,224 " " 80,472 " " 25,752 " 20Y3 " 25,752 " " 25,752 " - (a) "$750,000 ÷ 9.32 years = $80,472." ##### [715-60-55-78](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-78) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:cb155c65ced648f7ed9130bfbe810fef43f53331726d4fb0e9a53d2fc09b3b1b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Note: Under this approach, the first year's amortization is the same as the first year's amortization under the weighted remaining years of service method illustrated in Case A (see paragraph [715-60-55-76](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-76)). Thereafter, the amortization pattern will differ. ##### [715-60-55-79](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-79) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:132add90a7183302d6b4b528f6200677f14c2a2e0b5495f61942bb30a06c62da Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following Cases demonstrate the effects of gains and losses in accounting for postretirement benefits for Entity I from 20X3 to 20X5: 1. a The accounting for a loss resulting from changes in assumptions in measuring the accumulated postretirement benefit obligation (Case A). 2. b The effect of a gain when the return on plan assets exceeds projections (Case B). 3. c The accounting in a year in which both gains and losses are experienced (Case C). ##### [715-60-55-80](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-80) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:c7164b866a054a1caa15a3e885db2a343dae0fd1ca9cac3ce206d42ea50e99fd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entity I's plan is unfunded and the accumulated postretirement benefit obligation is $6,000,000 at the beginning of 20X3. There is also a $2,000,000 transition obligation remaining in accumulated other comprehensive income at that date. Beginning in 20X3, and unless otherwise noted, the entity decides to fund at the end of each year an amount equal to the benefits paid that year plus the service cost and interest cost for that year. ##### [715-60-55-81](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-81) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:44e1b4f416f2e5f090adccf04578a6a9ca3be61b3526968efee621ee8d5fa460 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For illustrative purposes, the following assumptions are used to project changes in the accumulated postretirement benefit obligation and plan assets during the period 20X3-20X5. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-6EE69789-F27C-4E58-A5BE-68F194A2FEB2-low.gif) 20X3 20X4 20X5 Discount rate 9.5% 9.0% 9.0% Expected long-term rate of return on plan assets 10.0% 10.0% Average remaining years of service of active plan participants 12 12 12 ##### [715-60-55-82](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-82) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:1a02601a78d6ccb04fc655b312d7969bdd2a9620acc3ff01dd7dde6c071e13cb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Pursuant to paragraph [715-60-35-39](https://asc.understandingaccounting.org/asc/715/60/#715-60-35-39), Entity I amortizes the transition obligation remaining in accumulated other comprehensive income over a 20-year period rather than the average remaining service period of active plan participants at the date of transition (12 years). Projected changes in net periodic postretirement benefit cost and other comprehensive income for 20X3 and changes in the postretirement benefit liability and accumulated other comprehensive income for 20X3 are summarized as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-E135C3F9-DC3A-41CE-97E7-D3A2FF4D13EB-low.gif) Net Periodic Postretirement Benefit Cost Other Comprehensive Income Postretirement Benefit Liability Transition Obligation Remaining in Accumulated Other Comprehensive Income Beginning of year 20X3 " $(6,000,000)" " $2,000,000 " Recognition of components of net periodic postretirement benefit cost: Service cost " $300,000 " " (300,000)" Interest cost " 570,000 " " (570,000)" Amortization of transition obligation " 300,000 " " $(300,000)" " (300,000)" Total net periodic postretirement benefit cost " $1,170,000 " Total other comprehensive income " $(300,000)" "Excess of assets contributed to plan over benefit payments ($1,500,000 - $630,000 = $870,000)" " 870,000 " Benefit payments from plan " 630,000 " Net change " 630,000 " " (300,000)" End of year 20X3—projected " $(5,370,000)" " $1,700,000 " ##### [715-60-55-83](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-83) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:3f04a48c5c066c44c0164853f36a0753d0462c2ec42df2c54807f49c4ec9665a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When Entity I's plan assets and obligations are measured at December 31, 20X3, the accumulated postretirement benefit obligation is $760,000 greater than projected (a loss occurs) because the discount rate declined to 9 percent and for various other reasons not specifically identified. Entity I elects to amortize amounts in excess of the corridor over the average remaining service period of active plan participants. ##### [715-60-55-84](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-84) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:6e505f81118b45d8e896a51bfad52bbf4aba2dc8e560d5e36860869c7fcf43c5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As used herein, amounts in excess of the corridor refers to the portion of the net gain or loss remaining in accumulated other comprehensive income in excess of the greater of those defined amounts. ##### [715-60-55-85](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-85) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:0226e2ebde1d2eb674bde6c3568aea3d4b0f5b451c559ee88c1974f356728367 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The projected and actual postretirement benefit liability and accumulated other comprehensive income at December 31, 20X3, and the difference between those projected and actual amounts at that date follow. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-71EDFF84-5325-4507-960E-8401D561C1E7-low.gif) Projected 12/31/X3 Loss Recognized in Other Comprehensive Income Actual 12/31/X3 Accumulated postretirement benefit obligation " $(6,240,000)" " $(760,000)" " $(7,000,000)" Plan assets at fair value " 870,000 " " 870,000 " Funded status and recognized liability " $(5,370,000)" " $(760,000)" " $(6,130,000)" Accumulated other comprehensive income: Net loss $- " $760,000 " " $760,000 " Transition obligation " 1,700,000 " " 1,700,000 " " $1,700,000 " " $760,000 " " $2,460,000 " ##### [715-60-55-86](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-86) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:62bf5c09dac2548e81bafa6a8cf36c70318c02bf0f1f655810a946cdce27ba58 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In addition to disclosures regarding changes in plan assets and benefit obligations required by paragraph [715-20-50-1(a) through 1(b)](https://asc.understandingaccounting.org/asc/715/20/#715-20-50-1), the 20X3 financial statements include the following disclosure of the components of net periodic postretirement benefit cost (as required by paragraph [715-20-50-1(h)](https://asc.understandingaccounting.org/asc/715/20/#715-20-50-1)). - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-F6808E76-8546-445D-AD8E-9B7E7AB41E11-low.gif) Service cost " $300,000 " Interest cost " 570,000 " Amortization of transition obligation " 300,000 " Net periodic postretirement benefit cost " $1,170,000 " The components of net periodic postretirement benefit cost other than the service cost component are included in the line item “other income/(expense)” in the income statement. ##### [715-60-55-87](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-87) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:2553b368ea8665518bd94b467905d4c78b6370df8386e5b5e97b48db4e3e6598 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Net periodic postretirement benefit cost and other comprehensive income for 20X4, and changes in the postretirement benefit liability and accumulated other comprehensive income are projected at the beginning of the year. That projection serves as the basis for interim accounting until a subsequent event occurs requiring remeasurement. The projection at the beginning of 20X4 follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-43AB54CC-6BE9-47F1-A0EE-AC725DE525AE-low.gif) Net Periodic Postretirement Benefit Cost Other Comprehensive Income Postretirement Benefit Liability Amounts Remaining in Accumulated Other Comprehensive Income Transition Obligation Net Loss Beginning of year 20X4 " $(6,130,000)" " $1,700,000 " " $760,000 " Recognition of components of net periodic postretirement benefit cost: Service cost " $320,000 " " (320,000)" Interest cost " 630,000 " " (630,000)" Amortization of transition obligation " 300,000 " " $(300,000)" " (300,000)" Amortization of net loss (a) " 5,000 " " (5,000)" " (5,000)" Expected return on plan assets (b) " (87,000)" " 87,000 " "Total net periodic postretirement benefit cost" " $1,168,000 " Total other comprehensive income " $(305,000)" "Excess of assets contributed to plan over benefit payments ($1,650,000 - $700,000 = $950,000)" " 950,000 " Benefit payments from plan " 700,000 " Net change "787,000" " (300,000)" " (5,000)" End of year 20X4—projected " $(5,343,000)" " $1,400,000 " " $755,000 " (a) See Schedule 2 (paragraph 715-60-55-94) for computation. (b) See Schedule 1 (paragraph 715-60-55-93) for computation. ##### [715-60-55-88](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-88) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:9411cabff1357de0cda89ff871ee86465572f0b930e65055198fe3dc5b7f6317 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When Entity I's plan assets and obligations are measured at December 31, 20X4, the fair value of the plan assets is $150,000 greater than expected (an experience gain) because market performance was better than the 10 percent return that was assumed. The projected and actual postretirement benefit liability and accumulated other comprehensive income at December 31, 20X4, and the difference between those projected and actual amounts at that date follow. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-F7318070-6A3C-4A20-8079-AE8F4F8B2050-low.gif) Projected 12/31/X4 Gain Recognized in Other Comprehensive Income Actual 12/31/X4 Accumulated postretirement benefit obligation " $(7,250,000)" " $(7,250,000)" Plan assets at fair value " 1,907,000 " " $150,000 " (a) " 2,057,000 " Funded status and recognized liability " $(5,343,000)" " $150,000 " " $(5,193,000)" Accumulated other comprehensive income: Net (gain) or loss " $755,000 " " $(150,000)" " $605,000 " Transition obligation " 1,400,000 " " 1,400,000 " " $2,155,000 " " $(150,000)" " $2,005,000 " (a) See Schedule 1 (paragraph 715-60-55-93) for computation. ##### [715-60-55-89](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-89) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:e9960d8fba180c4027eb0469483999535b135b30f1db2c75df149ce5eb0021e7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The 20X4 financial statements include the following disclosure of the components of net periodic postretirement benefit cost. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-4A6E9A0B-D439-48D6-AD9D-E64E85302350-low.gif) Service cost " $320,000 " Interest cost " 630,000 " Expected return on plan assets " (87,000)" Amortization of transition obligation " 300,000 " Amortization of net actuarial loss " 5,000 " Net periodic postretirement benefit cost " $1,168,000 " The components of net periodic postretirement benefit cost other than the service cost component are included in the line item “other income/(expense)” in the income statement. ##### [715-60-55-90](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-90) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:c70a5555c4b4593c751d955c218732e2cc0ba58d1c55c69346d9aa9b439b36e8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Projected changes in net periodic postretirement benefit cost and other comprehensive income for 20X5 and changes in the postretirement benefit liability and accumulated other comprehensive income for 20X5 are summarized as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-D69F520B-0193-4E5B-8A78-9832CB6EAD30-low.gif) Net Periodic Postretirement Benefit Cost Other Comprehensive Income Postretirement Benefit Liability Amounts Remaining in Accumulated Other Comprehensive Income Transition Obligation Net Loss Beginning of year 20X5 " $(5,193,000)" " $1,400,000 " " $605,000 " Recognition of components of net periodic postretirement benefit cost: Service cost " $360,000 " " (360,000)" Interest cost " 652,500 " " (652,500)" Amortization of transition obligation " 300,000 " " $(300,000)" " (300,000)" Amortization of net loss (a) Expected return on plan assets (b) " (193,700)" " 193,700 " Total net periodic postretirement benefit cost " $1,118,800 " Total other comprehensive income " $(300,000)" "Excess of plan assets contributed to plan over benefit payments ($1,912,500 - $900,000 = $1,012,500)" " 1,012,500 " Benefit payments from plan " 900,000 " Net change " 1,093,700 " " (300,000)" - End of year 20X5—projected " $(4,099,300)" " $1,100,000 " " $605,000 " (a) See Schedule 2 (paragraph 715-60-55-94) for computation. (b) See Schedule 1 (paragraph 715-60-55-93) for computation. ##### [715-60-55-91](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-91) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:4b0406bb9ebeb8b57fa7c6c64c5a0925b80466cd80f8d701ef51eb312793a4c8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When Entity I's plan assets and obligations are measured at December 31, 20X5, both an asset loss of $220,360 and a liability gain of $237,260 are determined. The projected and actual postretirement benefit liability and accumulated other comprehensive income at December 31, 20X5, and the difference between those projected and actual amounts at that date follow. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-EE29D825-DF62-4B69-9A24-A78BA4FDF83D-low.gif) Projected 12/31/X5 Gain (Loss) Recognized in Other Comprehensive Income Actual 12/31/X5 Accumulated postretirement benefit obligation " $(7,362,500)" " $237,260 " " $(7,125,240)" Plan assets at fair value " 3,263,200 " " (220,360)" (a) " 3,042,840 " Funded status and recognized liability " $(4,099,300)" " $16,900 " " $(4,082,400)" Accumulated other comprehensive income: Net (gain) or loss " $605,000 " " $(16,900)" " $588,100 " Transition obligation " 1,100,000 " " 1,100,000 " " $1,705,000 " " $(16,900)" " $1,688,100 " (a) See Schedule 1 (paragraph 715-60-55-93) for computation. ##### [715-60-55-92](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-92) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:9107f67d178020c530314f9a2e91a1a2fb981b032cc56530234d3509924853bf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The 20X5 financial statements include the following disclosure of the components of net periodic postretirement benefit cost. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-F2B9678B-D98C-4362-AEF0-8A29AC1BD4F2-low.gif) Service cost " $360,000 " Interest cost " 652,500 " Expected return on plan assets " (193,700)" Amortization of transition obligation " 300,000 " Net periodic postretirement benefit cost " $1,118,800 " The components of net periodic postretirement benefit cost other than the service cost component are included in the line item “other income/(expense)” in the income statement. ##### [715-60-55-93](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-93) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:64e41e0416167d21106ed996d0a689c85af6ff070a44629d349d628e1af77bd3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This schedule reflects the calculation of market-related value, the fair value of plan assets, the actual return on plan assets, and the deferred asset gain or loss for the year (the difference between actual and [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.") included in the net amortization and deferral component of net periodic postretirement benefit cost). - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-C09B5574-1F97-4073-879E-4069D6485E60-low.gif) 20X3 20X4 20X5 Expected long-term rate of return on plan assets 10.0% 10.0% "Beginning balance, market-related value (a)" $- " $870,000 " " $1,937,000 " Contributions to plan (end of year) " 1,500,000 " " 1,650,000 " " 1,912,500 " Benefits paid by plan " (630,000)" " (700,000)" " (900,000)" Expected return on plan assets " 87,000 " " 193,700 " " 870,000 " " 1,907,000 " " 3,143,200 " 20% of each of last 5 years' asset gains (losses) " 30,000 " " (14,072)" "Ending balance, market-related value" " $870,000 " " $1,937,000 " " $3,129,128 " "Beginning balance, fair value of plan assets" $- " $870,000 " " $2,057,000 " Contributions to plan " 1,500,000 " " 1,650,000 " " 1,912,500 " Benefits paid " (630,000)" " (700,000)" " (900,000)" Actual return (loss) on plan assets (b) - " 237,000 " " (26,660)" "Ending balance, fair value of plan assets" " $870,000 " " $2,057,000 " " $3,042,840 " Deferred asset gain (loss) for year (c) $- " $150,000 " " $(220,360)" Gain (loss) not included in ending balance market-related value (d) $- " $120,000 " " $(86,288)" (a) This Example uses an approach that adds in 20% of each of the last 5 years' gains or losses. (b) See Schedule 3 (paragraph 715-60-55-95) for computation. (c) (Actual return on plan assets) - (expected return on plan assets). (d) "(Ending balance, fair value of plan assets) - (ending balance, market-related value of plan assets)." ##### [715-60-55-94](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-94) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:84a421b7f009b98c9dbc8fe448d156be319f2da2cb9d1098e9852ed51e8da6ae Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following Schedule provides a way to calculate the minimum amortization of the net gain or loss included in accumulated other comprehensive income, to be included as a component of net periodic postretirement benefit cost. - ![](https://asc.understandingaccounting.org/asc-img/GUID-199FE02D-AC3E-4E3C-AC43-E2F47262AADD-low.gif) 20X3 20X4 20X5 10% of beginning balance of accumulated postretirement benefit obligation " $600,000 " " $700,000 " " $725,000 " 10% of beginning balance of market-related value of plan assets (a) $- " $87,000 " " $193,700 " Greater of the above " $600,000 " " $700,000 " " $725,000 " Net (gain) loss in accumulated other comprehensive income at beginning of year " $760,000 " " $605,000 " Asset gain (loss) not included in beginning balance of market-related value (b) - " 120,000 " Amount subject to amortization " $760,000 " " $725,000 " Amount in excess of the corridor subject to amortization " $60,000 " $- Divided by average remaining service period (years) 12 Required amortization " $5,000 " (a) See Schedule 1 (the table in the preceding paragraph) for calculation of market-related value of plan assets. (b) See Schedule 1 (the table in the preceding paragraph) for calculation of gain or loss not included in prior year's ending balance market-related value. ##### [715-60-55-95](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-95) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:b1f99510d3c127b0852f1baa3483494c34af3be27ffc740535464d442ddd5491 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The determination of the actual return or loss on plan assets component of net periodic postretirement benefit cost is as follows: - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-1F33A5A3-029F-47AD-992E-615D83D22F59-low.gif) 20X3 20X4 20X5 "Plan assets at fair value, beginning of year" $- " $870,000 " " $2,057,000 " Plus: assets contributed to plan " 1,500,000 " " 1,650,000 " " 1,912,500 " Less: benefit payments from plan " (630,000)" " (700,000)" " (900,000)" " 870,000 " " 1,820,000 " " 3,069,500 " "Less: plan assets at fair value, end of year" " (870,000)" " (2,057,000)" " (3,042,840)" Actual (return) loss on plan assets $- " $(237,000)" " $26,660 " ##### [715-60-55-96](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-96) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:ffd7639dab975873641e422917735584669842fedff2e96d7cc64f55049473a8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following Cases (Case A and Case B, paragraphs [715-60-55-97 through 55-102](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-97) ) demonstrate the operation of defined dollar capped plans and the possible effect of the cap on projecting costs for purposes of measuring the accumulated postretirement benefit obligation and net periodic postretirement benefit cost. The Cases are simplified and illustrate only one aspect of the measurement process (see paragraphs [715-60-15-7](https://asc.understandingaccounting.org/asc/715/60/#715-60-15-7) and [715-60-35-75](https://asc.understandingaccounting.org/asc/715/60/#715-60-35-75)). ##### [715-60-55-97](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-97) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:9ecc528afc5af2e1f4f5c2fbe4f2270f21f68fe8192bdf5794e4211af5e9f3cc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entity J sponsors a postretirement health care plan for its salaried employees. The plan has an annual limitation (a cap) on the dollar amount of the employer's share of the cost of covered benefits incurred by a plan participant. The retiree is responsible, therefore, for the amount by which the cost of the benefit coverage under the plan incurred during a year exceeds that cap. The entity adjusts the cap annually for the effects of inflation. For 20X3, the cap is $1,500; the inflation adjustment in 20X4 and 20X5 is assumed to be 4 percent. The employer's [health care cost trend rate](https://asc.understandingaccounting.org/glossary/h/#health-care-cost-trend-rate "An assumption about the annual rates of change in the cost of health care benefits currently provided by the postretirement benefit plan, due to factors other than changes in the composition of the plan population by age and dependency status, for each year from the measurement date until the end of the period in which benefits are expected to be paid. The health care cost trend rates implicitly consider estimates of health care inflation, changes in health care utilization or delivery patterns, technological advances, and changes in the health status of the plan participants. Differing types of services, such as hospital care and dental care, may have different trend rates.") assumption is 13 percent for 20X4 and 12 percent for 20X5. ##### [715-60-55-98](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-98) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:f4cb35dddf97cb7977c8f0635d893507d0c52b5e6f2bbe2ae16aa5032c27338a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The employer's projected cost of providing benefit coverage in 20X3-20X5 for a 67-year-old retiree follows. Similar projections are made for each age at which a plan participant is expected to receive benefits under the plan. In this Case, the incurred claims cost exceeds the cap on the employer's share of the cost in each year. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-B9281EB9-499D-4C7E-A45A-3FD24EF83F2A-low.gif) Expected Cost for 67-Year-Old Retiree 20X3 20X4 20X5 Gross eligible charges " $3,065 " " $3,463 " " $3,879 " Medicare (a) (890) " (1,003)" " (1,125)" Deductible or coinsurance (325) (340) (355) Incurred claims cost " $1,850 " " $2,120 " " $2,399 " Annual cap on employer's cost " $1,500 " " $1,560 " " $1,622 " Employer's share of incurred claims cost " $1,500 " " $1,560 " " $1,622 " Retiree's share of gross eligible charges (b) $675 $900 " $1,132 " (a) The change in Medicare reflects the portion of the gross eligible charges for which Medicare is responsible under enacted Medicare legislation. (b) "Deductible and/or coinsurance plus share of incurred claims: 20X3—\[$325 + ($1,850 - $1,500)\]; 20X4—\[$340 + ($2,120 - $1,560)\]; 20X5—\[$355 + ($2,399 - $1,622)\]." ##### [715-60-55-99](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-99) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:d7d27ab54ad23c5f04406f82047fe7067c9021c3a3d9e9f5ab3901f4213b5f22 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If, based on the health care cost trend rate assumptions, the employer's share of costs for each plan participant is not expected to be less than the cap in the future, Entity J could measure its expected postretirement benefit obligation by projecting the annual cap. However, if per capita claims data for some plan participants or estimates of the health care cost trend rate indicate that in the future the employer's share of the incurred claims cost will be less than the cap for at least some plan participants, the employer's obligation is to be measured as described in paragraphs [715-60-35-90 through 35-105](https://asc.understandingaccounting.org/asc/715/60/#715-60-35-90) . ##### [715-60-55-100](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-100) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:d94d4afb2d92543b196a11a94b1707938da92a69a4f6f2b8aa1d2087cf3988fd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entity K sponsors a contributory postretirement health care plan for its hourly employees. The plan has an annual limitation (a cap) on the dollar amount of the employer's share of the cost of covered benefits incurred by the retiree group as a whole. The Entity agrees to bear annual costs equal to a specified dollar amount ($1,500 in 20X3) multiplied by the number of retired plan participants (the employer contribution); participating retirees are required to contribute a stated amount each year ($1,000 in 20X3). The cap on the employer's share of annual costs and the retirees' contribution rates are increased 5 percent annually. The shortfall in a year (the amount by which incurred claims cost exceeds the combined employer and retiree contributions) is initially borne by the employer but is passed back to retirees in the subsequent year through supplemental retiree contributions for that year (a retrospective adjustment). ##### [715-60-55-101](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-101) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:ca74ae74fab486ae74dc58e63e342e18d8e80e2b377947a74465308dc28d9319 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The employer projects the aggregate cost of benefits expected to be paid to current plan participants (40 retirees) in each future period as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-0DFB8399-AA8F-4993-B895-65DFD9858298-low.gif) 20X3 20X4 20X5 Gross eligible charges " $160,000 " " $215,000 " " $197,000 " Medicare " (46,500)" " (62,350)" " (57,300)" Deductible or coinsurance " (20,750)" " (27,440)" " (24,700)" Incurred claims cost " $92,750 " " $125,210 " " $115,000 " Retiree contributions (a) " $40,000 " " $42,000 " " $44,080 " Maximum employer contribution (b) " 60,000 " " 63,000 " " 66,160 " " $100,000 " " $105,000 " " $110,240 " Shortfall (to be recovered by additional retiree contributions in subsequent year) " $20,210 " " $4,760 " Supplemental contribution from retirees due to shortfall in prior year " $20,210 " (a) "Per retiree: 20X3—$1,000; 20X4—$1,050; 20X5—$1,102." (b) "Per retiree: 20X3—$1,500; 20X4—$1,575; 20X5—$1,654." ##### [715-60-55-102](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-102) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:b530714a2dd20bed698a8e78da0fef6e57b9c4620f1652d4fe1967bbd47cdf50 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If, as in this Case, retirees absorb the entire shortfall in annual contributions and if there is a projected shortfall for all future years, the employer could measure its expected postretirement benefit obligation by projecting its annual contribution (contribution rate x expected number of retirees = expected obligation for the year). ### Medicare Prescription Drug, Improvement, and Modernization Act #### Implementation Guidance ##### [715-60-55-103](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-103) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:6f09cc879b4269931a5db5a9f7bc1ef1e217a7cb6dcce9695f0acf6a46b1e0a6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following flowchart illustrates the application of certain aspects of the accounting for the effects of the Medicare Prescription Drug, Improvement, and Modernization Act. - ![](https://asc.understandingaccounting.org/asc-img/GUID-A5C3235B-37EF-407D-8DEE-90CFDD733962-low.gif) ### Settlements, Curtailments, and Certain Termination Benefits ##### [715-60-55-104](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-104) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:e499c9c9742b67c31b590d604c01c8425cdeac1b3b3dedc095b036d2422480a8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A transaction that does not meet the three 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 the Settlements, Curtailments, and Certain Termination Benefits Subsections. ##### [715-60-55-105](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-105) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:8f83b513a56802a24fae977786c082b64899a5f6aba9941135b94fbd91650524 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](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.") may avoid or minimize certain risks. However, that investment decision does not constitute a settlement because that decision can be reversed, and investing in that portfolio does not relieve the employer (or the [plan](https://asc.understandingaccounting.org/glossary/p/#plan "An arrangement that is mutually understood by an employer and its employees, whereby an employer undertakes to provide its employees with benefits after they retire in exchange for their services over a specified period of time, upon attaining a specified age while in service, or a combination of both. A plan may be written or it may be implied by a well-defined, although perhaps unwritten, practice of paying postretirement benefits or from oral representations made to current or former employees. See Substantive Plan.")) of primary responsibility for a postretirement benefit obligation nor does it eliminate significant risks related to that obligation. ##### [715-60-55-106](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-106) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:d83325597af9435d2f46bfdedc451dd398bbee113187e1ee5103d2656f8eccc1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic requires recognition in [net periodic postretirement benefit cost](https://asc.understandingaccounting.org/glossary/n/#net-periodic-postretirement-benefit-cost "The amount recognized in an employer's financial statements as the cost of a postretirement benefit plan for a period. Components of net periodic postretirement benefit cost include service cost, interest cost, actual return on plan assets, gain or loss, amortization of prior service cost or credit, and amortization of the transition obligation or asset.") of any related [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 [transition obligation](https://asc.understandingaccounting.org/glossary/t/#transition-obligation "The amount, as of the date Subtopic 715-60 was initially applied, of the accumulated postretirement benefit obligation in excess of the fair value of plan assets plus any recognized accrued postretirement benefit cost or less any recognized prepaid postretirement benefit cost.") included in accumulated other comprehensive income. ##### [715-60-55-107](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-107) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:ce206b6ba56c8313340a2252d6e5c9145eeef18693240fa1941eed70e07077b9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A curtailment does not only result from events that occur outside a [postretirement benefit plan](https://asc.understandingaccounting.org/glossary/p/#postretirement-benefit-plan "See Plan."). ##### [715-60-55-108](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-108) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:2788f10c16c050db6c359f200cf90cbf642f333c37e609014dd15d9fa22feb85 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Although many curtailments may result from events that occur outside a plan, such as closing a plant, discontinuing a component of an entity, or otherwise terminating employees, a curtailment also can result from 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.") (including a negative plan amendment) that has the effect of eliminating the accrual of defined benefits for some or all of the future services of a significant number of active plan participants. (See Example 5, Case B \[paragraphs [715-60-55-143 through 55-145](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-143) \].) ##### [715-60-55-109](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-109) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:6d7e57adcf5f605520894de779ae8270872a2e95a10e56c9c99994616b9c048a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If such an amendment occurs, accounting for a curtailment should be applied to all of the following: 1. a Any decrease in the [accumulated postretirement benefit obligation](https://asc.understandingaccounting.org/glossary/a/#accumulated-postretirement-benefit-obligation "The actuarial present value as of a particular date of all future benefits attributed to an employee's service rendered to that date assuming the plan continues in effect and that all assumptions about future events are fulfilled. The accumulated postretirement benefit obligation generally reflects a ratable allocation of expected future benefits to employee service already rendered in the attribution period. Before an employee's full eligibility date, the accumulated postretirement benefit obligation as of a particular date for an employee is the portion of the expected postretirement benefit obligation attributed to that employee's service rendered to that date; on and after the full eligibility date, the accumulated and expected postretirement benefit obligations for an employee are the same.") representing the reduction or elimination of benefits attributable to future service, which may result in a curtailment gain 2. b Any increase in the accumulated postretirement benefit obligation resulting from employees retiring earlier than expected as a result of the amendment, which may result in a curtailment loss 3. c Any prior service cost or any transition obligation remaining in accumulated other comprehensive income attributable to the future years of service of the employee group for which future accrual of benefits has been eliminated. ##### [715-60-55-110](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-110) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:84e3333e40930d6705eff0e613652b52347e2d083d50c4f8d416c7c4dcd4e401 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A gain results if at the time of a curtailment there exists negative prior service cost included in accumulated other comprehensive income due to a previous plan amendment that reduced benefits under the plan. Under paragraph [715-60-35-20](https://asc.understandingaccounting.org/asc/715/60/#715-60-35-20), negative prior service cost included in accumulated other comprehensive income that results from an amendment that reduces benefits under the plan is treated the same as prior service cost that results from an amendment that improves benefits. For purposes of measuring the effect of a curtailment, prior service cost included in accumulated other comprehensive income includes any negative prior service cost from a prior plan amendment. Thus, the negative prior service cost included in accumulated other comprehensive income associated with the future years of service that are affected by the curtailment is a gain. That gain, to the extent it is not offset by any other effects of the curtailment, is currently recognized as a component of income. (See paragraphs [715-60-55-143 through 55-146](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-143) .) ##### [715-60-55-111](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-111) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:4f38cabacb84c77810ddebab421a8745307dac442c878c33cfcf195bc63c03ab Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An employer that immediately recognized its transition obligation in income upon adopting the provisions of this Subtopic subsequently amends its plan to eliminate its obligation for [postretirement benefits](https://asc.understandingaccounting.org/glossary/p/#postretirement-benefits "All forms of benefits, other than retirement income, provided by an employer to retirees. Those benefits may be defined in terms of specified benefits, such as health care, tuition assistance, or legal services, that are provided to retirees as the need for those benefits arises, such as certain health care benefits, or they may be defined in terms of monetary amounts that become payable on the occurrence of a specified event, such as life insurance benefits.") and partially compensates affected participants by increasing their pension benefits. In this case, the employer has terminated its postretirement benefit plan and effectively settled its remaining postretirement benefit obligation by increasing its obligation to pay pension benefits. Because the cost to the employer of settling its postretirement benefit obligation is the increase in the obligation for pension benefits, the gain on the termination of the plan must be measured taking into account the cost of the pension benefit increase. That increase should be accounted for as an increase in a pension liability (or a decrease in a pension asset). The obligation for postretirement benefits should be eliminated. The difference is a gain on [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.") that should be recognized pursuant to Subtopic 715-30. #### Illustrations ##### [715-60-55-112](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-112) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:7453b0fee976124df8299274486cb6c91816afa64ddb802e2ea589a358a684fe Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following Cases illustrate the accounting for settlements in various circumstances: 1. a Settlement when a transition obligation remains in accumulated other comprehensive income (Case A) 2. b Settlement when a [transition asset](https://asc.understandingaccounting.org/glossary/t/#transition-asset "The amount, as of the date Subtopic 715-60 was initially applied, of the fair value of plan assets plus any recognized accrued postretirement benefit cost or less any recognized prepaid postretirement benefit cost in excess of the accumulated postretirement benefit obligation.") remains in accumulated other comprehensive income (Case B) 3. c Effect of mid-year settlement on transition constraint (Case C). ##### [715-60-55-113](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-113) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:488701bff793be848cf86b5778e706a1e2421deb9218f4feaea88cb73e4cf445 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entity L sponsors a postretirement life insurance plan. On December 31, 20X4, Entity L settles the accumulated postretirement benefit obligation for its current [retirees](https://asc.understandingaccounting.org/glossary/r/#retirees "Collectively, that group of plan participants that includes retired employees, their beneficiaries, and covered dependents.") ($70,000) through the purchase of nonparticipating life insurance contracts. ##### [715-60-55-114](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-114) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:90aa7590c57550452c68f666c991504fe22d6c3812dab5170be6ee68ea2ba260 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In accounting for the settlement, Entity L must determine whether recognition in income of an additional amount of any transition obligation remaining in accumulated other comprehensive income is required pursuant to the constraint on delayed recognition in income of the transition obligation (see paragraphs [715-60-35-39 through 35-40](https://asc.understandingaccounting.org/asc/715/60/#715-60-35-39) ). At December 31, 20X4, the cumulative postretirement benefit cost accrued after the date of transition exceeds the cumulative benefits payments after that date (including payments made pursuant to the settlement) in this Case; thus, the constraint on delayed recognition in income of the transition obligation remaining in accumulated other comprehensive income is not operative. The results of the settlement are as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-9D8FADE1-1229-46FA-AAE7-6598CFB6517D-low.gif) "December 31, 20X4" Before Settlement Settlement After Settlement Accumulated postretirement benefit obligation " $(257,000)" " $70,000 " " $(187,000)" Plan assets at fair value " 73,000 " " (70,000)" (a) " 3,000 " Funded status and recognized liability " $(184,000)" $- " $(184,000)" Accumulated other comprehensive income: Net gain " $(44,575)" " $12,124 " (a) " $(32,451)" Prior service cost " 33,000 " " 33,000 " Transition obligation " 195,000 " " (12,124)" (a) " 182,876 " " $183,425 " $- " $183,425 " (a) "The maximum settlement gain subject to recognition in income is the net gain included in accumulated other comprehensive income after transition plus any transition asset remaining in accumulated other comprehensive income ($44,575 + $0 = $44,575) (see paragraph 715-60-35-151). If, as in this Case, only part of the accumulated postretirement benefit obligation is settled, a pro rata portion of the maximum gain based on the relationship of the accumulated postretirement benefit obligation settled to the total accumulated postretirement benefit obligation ($70,000 ÷ $257,000 or 27.2%) is subject to recognition in income. That amount ($44,575 x 27.2% = $12,124) must first reduce any transition obligation remaining in accumulated other comprehensive income; any excess is recognized in income in the current period (see paragraphs 715-60-35-152 through 35-155). In this Case, the settlement gain is entirely offset against the transition obligation remaining in accumulated other comprehensive income." ##### [715-60-55-115](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-115) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:bbd2444ac000c2c8fb888f97885df2763a8ec88f3e29b7bab06fb46e1a36212a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entity M sponsors a postretirement life insurance plan. On January 2, 20X5, Entity M settles the accumulated postretirement benefit obligation for its current retirees ($200,000) through the purchase of nonparticipating life insurance contracts. ##### [715-60-55-116](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-116) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:fb1ca73eb95cabe57bfee1815385d69a7facb1c55cf73c3d139836d829fad13b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Pursuant to paragraphs [715-60-35-150 through 35-155](https://asc.understandingaccounting.org/asc/715/60/#715-60-35-150) , a settlement gain of $78,506 is recognized in income, determined as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-51AE5C96-5336-4427-8FB5-4AE667C4AA4D-low.gif) "January 2, 20X5" Before Settlement Settlement After Settlement Accumulated postretirement benefit obligation " $(257,000)" " $200,000 " " $(57,000)" Plan assets at fair value " 350,900 " " (200,000)" " 150,900 " Funded status and recognized asset " $93,900 " $- " $93,900 " Accumulated other comprehensive income: Net gain " $(44,575)" " $34,679 " (a) " $(9,896)" Prior service cost " 33,000 " " 33,000 " Transition asset " (56,333)" " 43,827 " (a) " (12,506)" " $(67,908)" " $78,506 " " $10,598 " (a) "The maximum settlement gain is measured as the net gain included in accumulated other comprehensive income after transition plus the transition asset remaining in accumulated other comprehensive income ($44,575 + $56,333 = $100,908) (see paragraph 715-60-35-151). Since only a portion of the accumulated postretirement benefit obligation is settled, a pro rata portion of the maximum gain based on the relationship of the accumulated postretirement benefit obligation settled to the total accumulated postretirement benefit obligation ($200,000 ÷ $257,000 or 77.8%) is subject to recognition in income. That amount ($100,908 x 77.8% = $78,506) must first reduce any transition obligation remaining in accumulated other comprehensive income ($0); any excess is recognized in income in the current period (see paragraphs 715-60-35-152 through 35-155). In this Case, the entire settlement gain of $78,506 is recognized in income. The transition constraint of paragraph 715-60-35-39 that requires additional recognition in income of a transition obligation remaining in accumulated other comprehensive income in certain circumstances is not applicable because there is a transition asset remaining in accumulated other comprehensive income." ##### [715-60-55-117](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-117) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:a0e35a762d76db96b397a473e4c46019e252181f63e5e6914daf36c0c0e6719d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The transition constraint in paragraph [715-60-35-39](https://asc.understandingaccounting.org/asc/715/60/#715-60-35-39) that requires additional recognition in income of a transition obligation remaining in accumulated other comprehensive income in certain circumstances is not applicable because there is a transition asset remaining in accumulated other comprehensive income. ##### [715-60-55-118](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-118) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:afc007e2f0ffac003f55d905565b045bc5b64b77dae52935ce610ab493e8b2a4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Case illustrates the accounting for a settlement of part of the accumulated postretirement benefit obligation that occurs mid-year and the interaction between that event and other provisions of this Subtopic, such as the constraint on delayed recognition in net periodic postretirement benefit cost of the transition obligation. ##### [715-60-55-119](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-119) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:c01268ba38843de5a0e19d3db976cc9d2cc94dce73d95808c48693780fa95331 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entity N's accumulated postretirement benefit obligation for its postretirement life insurance plan was $6,000,000, and there were no [plan assets](https://asc.understandingaccounting.org/glossary/p/#plan-assets "Assets—usually stocks, bonds, and other investments (except certain insurance contracts as noted in paragraph 715-60-35-109)—that have been segregated and restricted (usually in a trust) to be used for a health and welfare plan (which can include active, terminated, and retired employees or their dependents or beneficiaries). The amount of plan assets includes amounts contributed by the employer, and by plan participants for a contributory plan, and amounts earned from investing the contributions, less benefits, income taxes, and other expenses incurred. 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. Securities of the employer held by the plan are includable in plan assets provided they are transferable. 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 the employer may intend that those assets be used to provide health and welfare benefits, which may include postretirement benefits. Those assets shall be accounted for in the same manner as other employer assets of a similar nature and with similar restrictions. If a plan has liabilities other than for benefits, those nonbenefit obligations are considered as reductions of plan assets. Amounts accrued by the employer but not yet paid to the plan are not plan assets. If a trust arrangement explicitly provides that segregated assets are available to satisfy claims of creditors in bankruptcy, such a provision would effectively permit those assets to be used for other purposes at the discretion of the employer. It is not necessary to determine that a trust is bankruptcy-proof for the assets of the trust to qualify as plan assets. However, assets held in a trust that explicitly provides that such assets are available to the general creditors of the employer in the event of the employer's bankruptcy would not qualify as plan assets."). In 20X3, the entity establishes a [policy of funding](https://asc.understandingaccounting.org/glossary/f/#funding-policy "The program regarding the amounts and timing of contributions by the employers, plan participants, and any other sources (for example, state subsidies or federal grants) to provide the benefits a pension plan or other postretirement benefit plan specifies.") at the end of each year an amount equal to the benefits paid during the year plus the service and interest cost for the year. Benefits are paid at the end of each year and in 20X3 are $630,000, which is less than the net periodic postretirement benefit cost accrued for the year ($1,170,000); thus, no additional transition obligation is recognized in net periodic postretirement benefit cost pursuant to paragraph [715-60-35-39](https://asc.understandingaccounting.org/asc/715/60/#715-60-35-39). Entity N elects to amortize net gains and losses included in accumulated other comprehensive income in excess of the corridor over the average remaining service period of plan participants (see paragraphs [715-60-35-29 through 35-30](https://asc.understandingaccounting.org/asc/715/60/#715-60-35-29) and [715-60-55-84](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-84)). ##### [715-60-55-120](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-120) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:2d21c9b5c0e766f0eef027d88e41419ac6c885396bae463e0e9a48f26936836e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. At the beginning of 20X4, Entity N projects the life insurance benefits expected to be paid in 20X4 to retirees' beneficiaries to determine whether recognition in net periodic postretirement benefit cost of an additional amount of the transition obligation remaining in accumulated other comprehensive income will be required (see paragraph [715-60-35-40](https://asc.understandingaccounting.org/asc/715/60/#715-60-35-40)). Although Entity N is considering settling a portion of the accumulated postretirement benefit obligation, the effects of the settlement are not included in the projection because plan settlements are not anticipated for measurement or recognition before their occurrence. The projection indicates that no additional amount is required to be recognized in net periodic postretirement benefit cost. On June 30, 20X4, Entity N contributes additional funds ($1,430,000) and settles a portion ($1,900,000) of the accumulated postretirement benefit obligation for its current retirees through the purchase of nonparticipating life insurance contracts. ##### [715-60-55-121](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-121) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:71904f592bc0cca9634b164dcf9654cc0309474f6af4881d7a2173cc816ed89e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The changes in the funded status of the plan and amounts included in accumulated other comprehensive income during the first six months of the year are as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-EE99BD22-AE39-460A-A066-1A682BC1A2E7-low.gif) Actual 12/31/X3 Six Months Postretirement Benefit Cost Assets Contributed to Plan Effects of Remeasurement Immediately before Settlement Before Settlement 6/30/X4 Accumulated postretirement benefit obligation " $(6,600,000)" " $(457,000)" (a) " $420,000 " (b) " $(6,637,000)" Plan assets at fair value " 870,000 " " 43,500 " (c) " $1,430,000 " - (b) " 2,343,500 " Funded status and recognized liability " $(5,730,000)" " (413,500)" " $1,430,000 " " $420,000 " " $(4,293,500)" Accumulated other comprehensive income: Net (gain) or loss " $360,000 " - " $(420,000)" (b) " $(60,000)" Transition obligation " 5,700,000 " " (150,000)" " 5,550,000 " Total accumulated other comprehensive income " $6,060,000 " " (150,000)" " $(420,000)" " $5,490,000 " (d) Total net periodic postretirement benefit cost " $(563,500)" (a) "Represents 6 months' service cost of $160,000 and interest cost of $297,000 on the accumulated postretirement benefit obligation for 20X4, assuming a 9% discount rate." (b) A gain results from the remeasurement of the accumulated postretirement benefit obligation immediately before the settlement as a result of a change in the assumed discount rates based on the interest rates inherent in the price at which the accumulated postretirement benefit obligation for the retirees will be settled. No gain or loss results from remeasurement of plan assets. (c) "Represents 6 months' return on plan assets, assuming a 10% return." (d) "Because there is a settlement (treated as a benefit payment) and funds are provided by the employer to effect that settlement, the constraint on delayed recognition in net periodic postretirement benefit cost of the transition obligation pursuant to paragraph 715-60-35-39 may be applicable. The test to determine whether additional recognition in income is necessary should be done based on amounts for the full year." ##### [715-60-55-122](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-122) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:0562f3970c04a4791aef6fd93e1032d2dfaf7eb40f67d676e053d695db5fe91a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Detailed calculations are presented in the following paragraph. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-A455E413-0C6A-4AAF-A4F9-C9D8ECEB9C18-low.gif) "June 30, 20X4" Before Settlement Settlement Recognition in Income of Transition Obligation After Settlement Accumulated postretirement benefit obligation " $(6,637,000)" " $1,900,000 " " $(4,737,000)" Plan assets at fair value " 2,343,500 " " (1,900,000)" " 443,500 " Funded status and recognized liability " $(4,293,500)" $- " $(4,293,500)" Accumulated other comprehensive income: Net (gain) or loss " $(60,000)" " $17,160 " (a) " $(42,840)" Transition obligation " 5,550,000 " " (17,160)" (a) " $(718,822)" " 4,814,018 " " $5,490,000 " $- " $(718,822)" " $4,771,178 " (a) "The maximum settlement gain subject to recognition in income is the net gain included in accumulated other comprehensive income after transition plus any transition asset remaining in accumulated other comprehensive income ($60,000 + $0 = $60,000). If, as in this Case, only part of the accumulated postretirement benefit obligation is settled, a pro rata portion of the maximum gain based on the relationship of the accumulated postretirement benefit obligation settled to the total accumulated postretirement benefit obligation ($1,900,000 ÷ $6,637,000 or 28.6%) is subject to recognition in income. That amount ($60,000 x 28.6% = $17,160) must first reduce any transition obligation remaining in accumulated other comprehensive income (see paragraphs 715-60-35-152 through 35-155); any excess is recognized in income. In this situation, the settlement gain is entirely offset against the transition obligation remaining in accumulated other comprehensive income." ##### [715-60-55-123](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-123) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:94af28c33fa59583c4f8794687d0a0a6ebc8100b0b0eaec90aa259fd4bc26218 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In this Case, at June 30, 20X4, cumulative benefit payments from the date of transition to December 31, 20X4, are projected to exceed cumulative postretirement benefit cost accrued for that same period as illustrated in the following table. The additional transition obligation to be recognized in income is the amount by which cumulative benefit payments exceed cost accrued, or $718,822. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-60C75DB1-B8CD-4101-B9E0-C85DD4FB7078-low.gif) Projected 12/31/X4 Benefit payments: Date of transition to beginning of 20X4 " $9,160,000 " 20X4 excluding settlement " 410,000 " Settlement " 1,900,000 " Cumulative benefit payments " $11,470,000 " Postretirement benefit cost recognized: Date of transition to beginning of 20X4 " $9,700,000 " 20X4 " 1,051,178 " (a) Cumulative cost recognized " $10,751,178 " Benefit payments in excess of cost recognized " $718,822 " (a) "$563,500 for period 1/1/X4-6/30/X4 plus $487,678 for period 7/1/X4-12/31/X4. The net postretirement benefit cost of $487,678 recognized in the second half of 20X4 (see the table in the following paragraph) includes amortization ($130,108) of the transition obligation that remains in accumulated other comprehensive income after recognizing in income an additional portion ($718,822) of the transition obligation remaining in accumulated other comprehensive income pursuant to paragraph 715-60-35-39. Because determination of the additional portion of the transition obligation to be recognized in income and the transition obligation amortized in income in the second half of 20X4 are interrelated, those amounts are determined in a single computation that is intended to result in the transition obligation remaining in accumulated other comprehensive income at the end of the year that appropriately reflects the constraint in paragraph 715-60-35-39." ##### [715-60-55-124](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-124) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:e5e0004768480577e176d3ad4c9bf6774774601a706317b9ccdd4c629824b071 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The projected funded status of the plan and the amounts remaining in accumulated other comprehensive income follow. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-9792E751-8AD1-4A2B-8585-5AFF78CE9C1C-low.gif) After Settlement 6/30/X4 Six Months Postretirement Benefit Cost Benefit Payments Assets Contributed to Plan Projected 12/31/X4 Accumulated postretirement benefit obligation " $(4,737,000)" " $(379,745)" (a) " $410,000 " " $(4,706,745)" Plan assets at fair value " 443,500 " " 22,175 " (b) " (410,000)" " $1,246,745 " " 1,302,420 " Funded status and recognized liability " $(4,293,500)" " (357,570)" $- " $1,246,745 " " $(3,404,325)" Accumulated other comprehensive income: Net gain " $(42,840)" - " $(42,840)" Transition obligation " 4,814,018 " " (130,108)" (c) " 4,683,910 " Total accumulated other comprehensive income " $4,771,178 " " (130,108)" " $4,641,070 " Total net periodic postretirement benefit cost " $(487,678)" (a) "Represents 6 months' service cost of $150,000 and interest cost of $229,745 on the accumulated postretirement benefit obligation, assuming a 9.7% discount rate." (b) "Represents 6 months' return on plan assets, assuming a 10% return." (c) "Transition obligation remaining in accumulated other comprehensive income at 6/30/X4, of $4,814,018 ÷ 18.5 years remaining in amortization period = $260,217; half-year amortization = $130,108." ##### [715-60-55-125](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-125) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:ad686015aaa54c15ab538e55c85c2f7e122d006b8de3faf89297d14aa4488866 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following Cases illustrate the accounting for curtailments: 1. a A gain and a transition obligation remain in accumulated other comprehensive income (Case A). 2. b Disposal of a portion of the business when a loss and a transition obligation remain in accumulated other comprehensive income (Case B). ##### [715-60-55-126](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-126) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:e787a6f608dac760f25f2fc0095fdd9738a02ac3438f3e74f676f288741047f5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entity P sponsors a postretirement benefit plan. On October 29, 20X4, Entity P decides to reduce its operations by terminating a significant number of employees effective December 31, 20X4. On October 29, 20X4, it is expected that a curtailment gain will result from the termination. A consequence of the curtailment is a significant reduction in the number of employees accumulating benefits under the plan. The remaining years of expected service associated with those terminated employees who were plan participants at the date of transition is 22 percent of the remaining years of service of all plan participants at the date of transition. The remaining years of service before full eligibility associated with those terminated employees who were plan participants at the date of a prior plan amendment is 18 percent of the remaining years of service of all plan participants at the date of that plan amendment. ##### [715-60-55-127](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-127) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:c89b4a0f357eedde472b302fa2747d48bd209f93a7534da6039c650d284c900a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The sum of the effects of the plan curtailment is a gain of $5,160 that should be recognized in income when the related employees terminate (see paragraph [715-60-35-171](https://asc.understandingaccounting.org/asc/715/60/#715-60-35-171)). That gain is determined as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-245FACC0-67B5-4CBE-8975-B3860690EF6D-low.gif) "December 31, 20X4" Before Curtailment Curtailment After Curtailment Accumulated postretirement benefit obligation " $(257,000)" " $54,000 " (a) " $(203,000)" Plan assets at fair value " 73,000 " " 73,000 " Funded status and recognized liability " $(184,000)" " $54,000 " " $(130,000)" Accumulated other comprehensive income: Net gain " $(44,575)" " $(44,575)" Prior service cost " 33,000 " " $(5,940)" (a) " 27,060 " Transition obligation " 195,000 " " (42,900)" (a) " 152,100 " Total accumulated other comprehensive income " $183,425 " " $(48,840)" " $134,585 " Gain from curtailment " $5,160 " (a) The effect of the curtailment consists of two components: a. "The transition obligation and prior service cost remaining in accumulated other comprehensive income associated with remaining years of service no longer expected to be rendered--measured as 22% (reduction in the remaining years of expected service associated with those terminated employees who were plan participants at the date of transition) of the transition obligation remaining in accumulated other comprehensive income of $195,000 ($42,900) and 18% (reduction in the remaining years of service before full eligibility for benefits associated with those terminated employees who were plan participants at the date of a prior plan amendment) of the prior service cost included in accumulated other comprehensive income of $33,000 related to that amendment ($5,940) (see paragraphs 715-60-35-164 through 35-166)" b. "The gain from the decrease in the accumulated postretirement benefit obligation of $54,000 (due to the termination of employees whose accumulated benefits were not vested under the plan) in excess of the net loss included in accumulated other comprehensive income of $0, or $54,000 (see paragraph 715-60-35-169\[a\])." ##### [715-60-55-128](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-128) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:702595d7b0970777730e6729efcb4fdb9deaf94eeac90a405656a01af7390407 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entity R sponsors a postretirement benefit plan. On December 31, 20X4, Entity R sells a portion of its business at a gain of $100,000 before considering the effect of the related curtailment of its postretirement benefit plan. In connection with the sale, the number of employees accumulating benefits under the plan is significantly reduced; thus, a curtailment occurs. The remaining years of expected service associated with the terminated employees who were plan participants at the date of transition is 22 percent of the remaining years of service of all plan participants at the date of transition. The remaining years of service before full eligibility associated with the terminated employees who were plan participants at the date of that prior plan amendment is 18 percent of the remaining years of service of all plan participants at the date of that plan amendment. ##### [715-60-55-129](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-129) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:92b4c363e0ba02a6d719c58569b73425d7dd3334216bf65038d2c5287646a4c0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The sum of the effects of the plan curtailment is a loss of $36,265 that should be recognized in income with the gain of $100,000 associated with Entity R's sale of a portion of its business. The loss is determined as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-7FF3F238-CC89-4291-887D-F5C605C224E5-low.gif) "December 31, 20X4" Before Curtailment Curtailment After Curtailment Accumulated postretirement benefit obligation " $(343,000)" " $54,000 " (a) " $(289,000)" Plan assets at fair value " 73,000 " " 73,000 " Funded status and recognized liability " $(270,000)" " $54,000 " " $(216,000)" Accumulated other comprehensive income: Net loss " $41,425 " " $(41,425)" (a) $- Prior service cost " 33,000 " " (5,940)" (a) " 27,060 " Transition obligation " 195,000 " " (42,900)" (a) " 152,100 " Total accumulated other comprehensive income " $269,425 " " $(90,265)" " $179,160 " Curtailment loss " $36,265 " (a) The effect of the curtailment consists of two components: a. "The transition obligation and prior service cost remaining in accumulated other comprehensive income associated with remaining years of service no longer expected to be rendered--measured as 22% (reduction in the remaining years of expected service associated with those terminated employees who were plan participants at the date of transition) of the transition obligation remaining in accumulated other comprehensive income of $195,000 ($42,900) and 18% (reduction in the remaining years of service before full eligibility for benefits associated with those terminated employees who were plan participants at the date of a prior plan amendment) of the prior service cost included in accumulated other comprehensive income of $33,000 related to that amendment ($5,940) (see paragraphs 715-60-35-164 through 35-166)" b. "The gain from the decrease in the accumulated postretirement benefit obligation of $54,000 (due to the termination of employees whose accumulated benefits were not vested under the plan) in excess of the net loss included in accumulated other comprehensive income of $41,425, or $12,575 (see paragraph 715-60-35-169\[a\])." ##### [715-60-55-130](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-130) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:d768498e3c25fca85abffb81bb008bc8693a47c481f07f51c291da015d0aac82 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entity S sells a line of business on December 31, 20X4; before that date, the entity had no formal plan for disposal of those operations. Entity S has a separate postretirement benefit plan that provides health care benefits to retirees of the division that is sold. In connection with that sale, all of the employees of that division are terminated by Entity S resulting in no further accumulation of benefits under the postretirement benefit plan (a full curtailment), most of the terminated employees are hired by the acquiring entity (some terminated employees fully eligible for benefits elect to retire immediately), an accumulated postretirement benefit obligation of $80,000 for postretirement benefits related to the hired employees is assumed by the acquiring entity (a partial settlement, since the obligation for current retirees is retained by Entity S), and plan assets of $100,000, representing $80,000 for the settlement of the accumulated postretirement benefit obligation and $20,000 as an excess contribution, are transferred from the plan to the acquiring entity. A $300,000 gain from the sale is calculated before considering the related effects on the plan. ##### [715-60-55-131](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-131) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:735db64de02a31abaa33a5a8acc39eef21eab4a6a3da0253587934e9317eabed Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The employer's accounting policy is to determine the effects of a curtailment before determining the effects of a settlement when both events occur simultaneously. ##### [715-60-55-132](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-132) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:ec7215355d4cdfee7099b93ca42699587140b4caa970e8f87cfc55fffbb863f1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The effect of the curtailment is determined as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-C634373A-B6B9-43EA-9370-0087955E7067-low.gif) "December 31, 20X4" Before Curtailment Curtailment-Related Effects Resulting from Sale After Curtailment Accumulated postretirement benefit obligation " $(257,000)" " $(10,000)" (a) " $(267,000)" Plan assets at fair value " 110,000 " " 110,000 " Funded status and recognized liability " $(147,000)" " $(10,000)" " $(157,000)" Accumulated other comprehensive income: Net gain " $(49,575)" " $10,000 " (a) " $(39,575)" Prior service cost " 33,000 " " (33,000)" (b) - Transition obligation " 195,000 " " (195,000)" (c) - Total accumulated other comprehensive income " $178,425 " " $(218,000)" " $(39,575)" Curtailment loss " $228,000 " (a) "The increase in the accumulated postretirement benefit obligation as a result of the fully eligible employees retiring earlier than expected is a loss of $10,000. That loss reduces the net gain included in accumulated other comprehensive income of $49,575; any excess (none in this Example) would be recognized in income as the effect of a curtailment (see paragraphs 715-60-35-169 through 35-170)." (b) "Measured as 100% (reduction in the remaining years of service before full eligibility for benefits associated with those terminated employees who were plan participants at the date of a prior plan amendment) of the prior service cost included in accumulated other comprehensive income of $33,000 related to that amendment (see paragraphs 715-60-35-164 through 35-166)." (c) "Measured as 100% (reduction in the remaining years of expected service associated with those terminated employees who were plan participants at the date of transition) of the transition obligation remaining in accumulated other comprehensive income of $195,000 (see paragraphs 715-60-35-164 through 35-166)." ##### [715-60-55-133](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-133) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:27b581aab442f6c2fc86f0272423b133087bc036a57fdba8018ac488f99bb96c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The $8,128 loss related to the settlement and transfer of plan assets that is recognized in income with the gain from the sale is determined as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-5657B8CE-28F3-4BE7-99C2-0F854D614D76-low.gif) "December 31, 20X4" After Curtailment Settlement and Transfer of Plan Assets After Settlement Accumulated postretirement benefit obligation " $(267,000)" " $80,000 " (a) " $(187,000)" Plan assets at fair value " 110,000 " " (100,000)" (a) " 10,000 " Funded status and recognized liability " $(157,000)" " $(20,000)" " $(177,000)" Accumulated other comprehensive income: Net gain " $(39,575)" " $11,872 " (b) " $(27,703)" Prior service cost - - Transition obligation - - Total accumulated other comprehensive income " $(39,575)" " $11,872 " " $(27,703)" Settlement loss " $8,128 " (a) "The accumulated postretirement benefit obligation for the employees hired by the purchaser is determined to be $80,000 and is settled when Entity S transfers plan assets of an equal amount to the purchaser. In connection with the purchase agreement, Entity S transfers an additional $20,000 of plan assets." (b) "Represents a pro rata amount of the maximum gain based on the relationship of the accumulated postretirement benefit obligation settled to the total accumulated postretirement benefit obligation ($80,000 / $267,000 or 30%). The maximum gain is measured as the net gain included in accumulated other comprehensive income after transition plus any transition asset remaining in accumulated other comprehensive income ($39,575 + $0 = $39,575). The settlement gain is, therefore, 30% of $39,575, or $11,872; recognition in income of that gain is subject to first reducing any transition obligation remaining in accumulated other comprehensive income. As there is no transition obligation remaining in accumulated other comprehensive income (the remainder was recognized in income in connection with the curtailment), the gain of $11,872 is recognized in income together with the excess $20,000 transfer of plan assets as part of the net gain from the sale (see paragraphs 715-60-35-151 through 35-155)." ##### [715-60-55-134](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-134) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:cf43e1042fc7566e906420ba61b30dc8fc8d8201cd7dc02717a1e7290c4d7428 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The sum of the effects related to postretirement benefits resulting from the sale is a loss of $236,128, the components of which are as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-FAA35024-21EC-48AF-A35E-2B736D126A0A-low.gif) Curtailment loss (paragraph 715-60-55-132) " $228,000 " Net settlement loss (see the table in the preceding paragraph) " 8,128 " Effects of sale " $236,128 " ##### [715-60-55-135](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-135) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:37755efff450e7eabdad1d74b59c7ef53df386f0209e1c2bbe003a9e4d4caa9c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the measurement of the effects of an offer of special [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.") pursuant to paragraphs [715-60-25-4 through 25-6](https://asc.understandingaccounting.org/asc/715/60/#715-60-25-4) and the accounting for the related curtailment. ##### [715-60-55-136](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-136) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:45f790e5f78c55425fe8ec6109adae10cb1cd8feb3a035d0cfe711e2391bd481 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. On January 16, 20X5, Entity T offers for a short period of time (until January 30, 20X5) special benefits to its employees who elect voluntary termination of employment during that period (special termination benefits). As part of the offer, employees who voluntarily terminate will be credited with an additional five years of service and five years of age to determine eligibility for [postretirement health care benefits](https://asc.understandingaccounting.org/glossary/p/#postretirement-health-care-benefits "A form of postretirement benefit provided by an employer to retirees for defined health care services or coverage of defined health care costs, such as hospital and medical coverage, dental benefits, and eye care."). Employees are normally eligible for those benefits upon attaining age 55 and rendering at least 20 years of service. ##### [715-60-55-137](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-137) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:b6c9a2628a62d87951f0d3741996cb08f5618f4688b4fd2ebc318ce267c67dad Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. On January 30, 20X5, employees representing 18 percent of the work force accept the offer of special termination benefits. For those employees, the accumulated postretirement benefit obligation attributed to prior service periods based on their previously expected retirement dates (without consideration of the special offer) is $280,000. If those employees were assumed to terminate (retire) immediately upon attaining full eligibility for benefits (age 55 with 20 years of service), the accumulated postretirement benefit obligation for those employees would be $450,000. The accumulated postretirement benefit obligation for those employees after they accept the offer of the special termination benefits ([full eligibility date](https://asc.understandingaccounting.org/glossary/f/#full-eligibility-date "The date at which an employee has rendered all of the service necessary to have earned the right to receive all of the benefits expected to be received by that employee (including any beneficiaries and dependents expected to receive benefits). Determination of the full eligibility date is affected by plan terms that provide incremental benefits expected to be received by or on behalf of an employee for additional years of service, unless those incremental benefits are trivial. Determination of the full eligibility date is not affected by plan terms that define when benefit payments commence or by an employee's current marital or dependency status.") accelerated, benefit coverage begins immediately) is $630,000. ##### [715-60-55-138](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-138) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:b0e517c6c4678d67431ec4c7624b12d30cda29ca46fdbf1efe94be289415fc69 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The remaining years of expected service associated with the terminated employees who were plan participants at the date of transition is 24 percent of the remaining years of service of all plan participants at the date of transition. In addition, the portion of the prior service cost remaining in accumulated other comprehensive income arising from a prior plan amendment associated with the remaining years of service before full eligibility that are no longer expected to be rendered by the terminated employees is $25,000. ##### [715-60-55-139](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-139) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:6e0817c18e0bd81ea268aaf085ac6f57a5cd3a0534fa6149074ed071e4c3f8e4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In this illustration, the effects resulting from the curtailment are not reasonably estimable until January 30, 20X5, the acceptance date of the offer of special termination benefits. Consequently, at January 30, 20X5, the employer recognizes a loss of $453,400 that includes the cost of the special termination benefits ($180,000) and the net loss from the curtailment ($273,400) determined as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-5F67C2CE-7BB7-4305-A249-99513895F21D-low.gif) "January 30, 20X5" Before Employee Terminations Special Termination Benefits Effect of Curtailment After Employee Terminations Accumulated postretirement benefit obligation: Employees accepting offer " $(280,000)" " $(180,000)" (a) " $(170,000)" (b) " $(630,000)" Other employees " (633,000)" " (633,000)" " (913,000)" " (180,000)" " (170,000)" " (1,263,000)" Plan assets at fair value " 141,000 " " 141,000 " Funded status and recognized liability " $(772,000)" " $(180,000)" " $(170,000)" " $(1,122,000)" Accumulated other comprehensive income: Net gain " $(88,000)" " $88,000 " (b) $- Prior service cost " 148,500 " " (25,000)" (c) " 123,500 " Transition obligation " 693,333 " " (166,400)" (c) " 526,933 " Total accumulated other comprehensive income " $753,833 " " $(103,400)" " $650,433 " Net loss " $180,000 " " $273,400 " (a) "The loss from acceptance of the special termination benefits is $180,000 ($450,000 - $630,000), representing the difference between the accumulated postretirement benefit obligation measured assuming that active plan participants not yet fully eligible for benefits would terminate employment at their full eligibility date and that fully eligible plan participants would retire immediately and the accumulated postretirement benefit obligation reflecting the special termination benefits (see paragraph 715-60-25-5)." (b) "The increase in the accumulated postretirement benefit obligation as a result of the employees (fully eligible plan participants and other active plan participants not yet fully eligible for benefits) retiring at a date earlier than expected is a loss of $170,000 ($280,000 - $450,000). That amount is reduced by the net gain of $88,000 included in accumulated other comprehensive income (see paragraph 715-60-35-169\[b\]) as part of the accounting for the curtailment." (c) "Additional effects of the curtailment are the reduction of $25,000 in the prior service cost included in accumulated other comprehensive income (arising from a prior plan amendment) associated with the remaining years of service before full eligibility that are no longer expected to be rendered by the terminated employees and the reduction of $166,400 in the transition obligation remaining in accumulated other comprehensive income associated with remaining years of service no longer expected to be rendered--measured as 24% (reduction in the remaining years of expected service associated with those employees affected by the early retirement who were plan participants at the date of transition) of the transition obligation remaining in accumulated other comprehensive income of $693,333 (see paragraphs 715-60-35-164 through 35-166)." ##### [715-60-55-140](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-140) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:11d99245fcb20685c87626f7327f4a3d55b273d11ece068b15b830dabd0b40d1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. It is important to distinguish between a reduction in the accumulated postretirement benefit obligation caused by a negative plan amendment and a reduction caused by a curtailment. Unless the plan is being terminated, a reduction in the accumulated postretirement benefit obligation caused by a curtailment (a curtailment that reduces the [expected postretirement benefit obligation](https://asc.understandingaccounting.org/glossary/e/#expected-postretirement-benefit-obligation "The actuarial present value as of a particular date of the postretirement benefits expected to be paid by the employer's plan to or for each employee, the employee's beneficiaries, and any covered dependents pursuant to the terms of the plan.")) is potentially recognizable as a current component of income. ##### [715-60-55-141](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-141) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:f16265c9a425375af6857eb8349ba2f8706580ee230c124b9997c098d4950e8a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following Cases illustrate when a reduction in the accumulated postretirement benefit obligation is caused by: 1. a A negative plan amendment (Case A) 2. b A curtailment (Case B). ##### [715-60-55-142](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-142) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:9f448bb2156eef95f3c37144b95db6d29938653525250df31177ef6d6fa55799 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. On December 31, 20X1, Entity A changes the terms of its retiree health care plan to require current and future retirees to contribute $100 per month toward the cost of benefits provided by the plan. The plan was previously noncontributory. As a result of the change, the accumulated postretirement benefit obligation for both active employees and retirees at December 31, 20X1, decreases by $500,000. That reduction is a negative plan amendment because the change in plan terms has reduced the benefits under the plan attributed to employee service already rendered. A curtailment has not occurred because there has been no reduction in the expected years of future service of active plan participants and the plan continues to provide additional benefits for future services. ##### [715-60-55-143](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-143) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:545135fb9025449693b4b8ef985f29279827b8f9c851a47ab5ab6ffc4dd7e6c0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. On December 31, 20X1, Entity B changes the terms of its retiree life insurance plan for future retirees from a death benefit equal to 5 percent of final pay for each year of service to a death benefit equal to 5 percent of the pay rate in effect at December 31, 20X1, for each year of service before that date. Because Entity B switched the terms under which benefits are based to provide benefits only for services rendered before December 31, 20X1, the entity will no longer provide benefits for future service and there will be no increases in retiree life insurance for any employee services rendered after that date. That change constitutes a curtailment because accruals of death benefits for future employee service are no longer required (that is, the change eliminates the need for future accruals of death benefits for all of the future services of the active plan participants). However, the change in plan terms does not result in a termination of the plan because there is a continuing obligation to pay the future death benefits already earned by employees and current retirees. Only the accrual of additional death benefits for employees' future services has been eliminated. ##### [715-60-55-144](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-144) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:62381124898e5fb5ba60413d10c1e807e7d452a9c0e981ef5f4762e8c0fcd4b8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Because this plan was previously a final-pay plan, the accumulated postretirement benefit obligation at December 31, 20X1, before the amendment included an amount based on projected future employee pay levels. In this Case, that amount equaled $400,000. Thus, the accumulated postretirement benefit obligation at December 31, 20X1, decreases by $400,000 as a result of the plan amendment because increases in employees' future pay levels will no longer increase their death benefits under the plan. That reduction is potentially a currently recognizable curtailment gain. ##### [715-60-55-145](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-145) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:eade4f5e8d0423054fac33fdc70f963bf3efed743b27db29d663f56d79f13d21 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Whether any or all of the $400,000 should be recognized currently as a component of net periodic postretirement benefit cost depends on the existence and amount of any net loss included in accumulated other comprehensive income that must be offset before that curtailment gain can be recognized. Any prior service cost or transition obligation included in accumulated other comprehensive income also will enter into determining the net curtailment [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."). ##### [715-60-55-146](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-146) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:a7346986ccd421b4c2f474250a670b3cafeee665a63f8cd5bc3c5ece764240ca Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following Cases illustrate the accounting for a negative plan amendment that results in a curtailment: 1. a The accounting for a negative plan amendment that results in a curtailment gain (Case A) 2. b The accounting for a negative plan amendment that results in a curtailment loss (Case B) 3. c The accounting for a negative plan amendment and a curtailment that results in recognition as a component of net periodic postretirement benefit cost of prior service cost included in accumulated other comprehensive income (Case C). ##### [715-60-55-147](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-147) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:93948c7f245053b56b7ba1e4083ce47f179dd7e890083278a0fe2425f7f9a5f6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entity A sponsors an unfunded postretirement benefit plan whose only benefit is life insurance coverage equal to an employee's final pay. On December 31, 20X1, Entity A amends its plan to eliminate that benefit for active employees who are not 40 years of age or older, which is a significant portion of its work force. The resulting reduction in the accumulated postretirement benefit obligation consists of two components: $150,000 represents benefits based on past pay and service already rendered by employees under age 40 (a negative plan amendment), and $250,000 represents that portion of the accumulated postretirement benefit obligation based on a projection of those employees' future pay. Because the change in plan terms eliminates the accrual of additional benefits for those employees, the $250,000 is potentially a currently recognizable curtailment gain. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-68C8193E-264A-4008-9928-BC60DF8E36D5-low.gif) "December 31, 20X1" Before Negative Plan Amendment Negative Plan Amendment After Negative Plan Amendment Curtailment After Curtailment Accumulated postretirement benefit obligation (recognized liability) " $(750,000)" " $150,000 " " $(600,000)" " $250,000 " " $(350,000)" Amounts recognized in accumulated other comprehensive income: Prior service cost " $50,000 " " $(50,000)" (a) $- Transition obligation " 70,000 " " (70,000)" (a) - Net loss " 100,000 " " 100,000 " " $(100,000)" (b) Negative prior service cost " (30,000)" " (30,000)" " $(30,000)" " $220,000 " " $(150,000)" " $70,000 " " $(100,000)" " $(30,000)" (a) "The decrease in the accumulated postretirement benefit obligation due to a negative plan amendment is used first to reduce any existing prior service cost recognized in accumulated other comprehensive income, then to reduce any transition obligation recognized in accumulated other comprehensive income." (b) The decrease in the accumulated postretirement benefit obligation due to a curtailment is used first to reduce any net loss recognized in accumulated other comprehensive income at the date of the curtailment. ##### [715-60-55-148](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-148) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:fbd189af804ddc5ae69aa8082f2433af5e357b5b8e6cd3724f078b855701b038 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The journal entry to record the negative plan amendment is as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-B7D1A0B4-7E98-41D0-8632-4CF1864B8955-low.gif) Postretirement benefit liability " $150,000 " Other comprehensive income " $150,000 " ##### [715-60-55-149](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-149) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:2473cd2bdd4e7e5a9bfb34e5737c1116e530de2c975064686ad5076ed556cc83 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The journal entry to record the curtailment gain is as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-5A37499A-10D7-405C-BB0E-D1297387854C-low.gif) Postretirement benefit liability " $250,000 " Other comprehensive income " $100,000 " Curtailment gain " $150,000 " (a) (a) The curtailment gain is not a component of net periodic postretirement benefit cost and should be disclosed separately. ##### [715-60-55-150](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-150) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:13c98759d02b1fcb5c118853a1b03315ae06127858d454384dc8767fb2550229 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The negative plan amendment results in negative prior service cost because it reduces the accumulated postretirement benefit obligation by an amount that exceeds the prior service cost and the remaining transition obligation included in accumulated other comprehensive income. The negative prior service cost of $30,000 is recognized in net periodic postretirement benefit cost by amortizing it over future periods beginning January 1, 20X2, in accordance with paragraph [715-60-35-17](https://asc.understandingaccounting.org/asc/715/60/#715-60-35-17). Only those participants who are active at the date of the amendment and who are not yet fully eligible for benefits (that is, participants who are 40 years of age or older) are considered in applying that paragraph to the net negative prior service cost that results from this plan amendment ##### [715-60-55-151](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-151) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:f87782a2ffb17b8614e42e1de1dd168195f9ddff4822edf0aa190dfb716fbe8d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If Entity A had instead amended the plan on October 31, 20X1, and it had a calendar-year fiscal year-end, the effects of the negative plan amendment in determining net periodic postretirement benefit cost for 20X1 would be recognized prospectively starting from November 1, 20X1. The net periodic postretirement benefit cost for the first 10 months of the year would reflect the terms of the plan before the plan amendment. ##### [715-60-55-152](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-152) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:99e0b3dfaa9480de70a8ef43f34096fffad8aae60c2d643cda6bbec70635c2be Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entity B sponsors an unfunded postretirement health care benefit plan covering employees at five locations. On December 1, 20X1, Entity B amends its plan so that any employee at location X who does not retire by the end of 20X1 will not be entitled to receive benefits. Those employees at location X who retire by December 31, 20X1, will receive benefits under the plan terms. Employees at the other four locations are not affected by the amendment and will continue to earn benefits. ##### [715-60-55-153](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-153) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:700c89fa94524b4d497b0564818d50cecb86f94cc44fce4d15305fefd5f51ca6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As a result of the amendment, Entity B's accumulated postretirement benefit obligation is reduced by $400,000, representing the elimination of benefits attributable to years of service already rendered by active employees who are not eligible to retire and those eligible employees who choose not to retire (a negative plan amendment). The remaining employees at location X decide to take early retirement on December 31, 20X1 (a curtailment). The unexpected early retirements cause a $200,000 increase in the accumulated postretirement benefit obligation that is accounted for as part of the curtailment. The previously expected remaining years of service associated with all employees at location X who were plan participants at the date of transition represent 20 percent of the previously expected remaining years of service of all plan participants at the date of transition. As a result, $100,000 (20 percent x $500,000) is recognized representing accelerated [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 the transition obligation remaining in accumulated other comprehensive income. Because the prior service cost included in accumulated other comprehensive income is eliminated by the negative plan amendment, it does not enter into the accounting for the curtailment. ##### [715-60-55-154](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-154) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:b3106e7ea827224ff2c8430a7310e3f8020ee5c4fe8161e3d2f15f3ad6db580b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Unlike the terms of the plan described in Example 6, Case A (see paragraphs [715-60-55-147 through 55-151](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-147) ), benefits under this plan are not pay-related. Thus, the accounting for the curtailment does not include any gain for the elimination of the effects of a projection of final pay. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-800FD598-6319-4628-9849-BDA02F5ECA69-low.gif) "December 31, 20X1" Before Negative Plan Amendment Negative Plan Amendment After Negative Plan Amendment Curtailment After Curtailment Accumulated postretirement benefit obligation (recognized liability) " $(950,000)" " $400,000 " " $(550,000)" " $(200,000)" " $(750,000)" Amounts recognized in accumulated other comprehensive income: Prior service cost " $100,000 " " $(100,000)" (a) $- Transition obligation " 800,000 " " (300,000)" (a) " 500,000 " " $(100,000)" " $400,000 " Net gain " (150,000)" " (150,000)" " 150,000 " (b) - " $750,000 " " $(400,000)" " $350,000 " " $50,000 " " $400,000 " (a) "The decrease in the accumulated postretirement benefit obligation due to a negative plan amendment is used first to reduce any existing prior service cost recognized in accumulated other comprehensive income, then to reduce any transition obligation recognized in accumulated other comprehensive income." (b) The increase in the accumulated postretirement benefit obligation due to a curtailment is used first to reduce any net gain recognized in accumulated other comprehensive income at the date of the curtailment. ##### [715-60-55-155](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-155) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:ec1e6a390f5af40e382b67e70c02ec936b57a8ca54b6d5c1ee7299770220a1a0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The journal entry to record the negative plan amendment is as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-5888894A-58A9-42A2-990F-EAC969F4ABBC-low.gif) Postretirement benefit liability " $400,000 " Other comprehensive income " $400,000 " ##### [715-60-55-156](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-156) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:9840dad055c53ea42ca6975e371ab2d1de60bb936746875fc965e47131e4b480 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The journal entry to record the curtailment loss is as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-0C1FB562-98D4-4F8A-BA6C-C7CBD3770C7B-low.gif) Curtailment loss " $150,000 " (a) Other comprehensive income " 50,000 " Postretirement benefit liability " $200,000 " (a) The curtailment loss is not a component of net periodic postretirement benefit cost and should be disclosed separately. ##### [715-60-55-157](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-157) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:c9b213e533e3a2458e947b7c9ee7f3bbe024110b72587b736259c37ec0e17799 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entity C sponsors an unfunded postretirement health care benefit plan. Benefits under the plan are not pay-related; thus, no assumption is required about employees' future pay levels in measuring the accumulated postretirement benefit obligation. When it initially adopted the requirements of this Topic, Entity C immediately recognized its transition obligation in net income. On December 31, 20X1, the entity changes the plan's eligibility requirements from the attainment of age 65 while in service and 20 years of service to 20 years of service to be rendered after attaining age 45. The new [credited service period](https://asc.understandingaccounting.org/glossary/c/#credited-service-period "Employee service period for which benefits are earned pursuant to the terms of the plan. The beginning of the credited service period may be the date of hire or a later date. For example, a plan may provide benefits only for service rendered after a specified age. Service beyond the end of the credited service period does not earn any additional benefits under the plan. See Attribution Period.") is not deemed to be nominal in relation to employees' average total years of service before their full eligibility dates. This change reduces the accumulated postretirement benefit obligation for benefits attributable to past service (a negative plan amendment) by $300,000 for employees hired before age 45. ##### [715-60-55-158](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-158) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:290f1c86d4a05f3feb369662998a3b4e4eb6914d959268df498b01c6d782301a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Because a significant number of employees previously expected to receive benefits under the plan are under age 45, the change in plan terms also meets the definition of a curtailment because it eliminates those employees as active participants under the plan. Their remaining years of expected service represent 15 percent of the previously expected remaining years of service of all plan participants at the date of a prior plan amendment that increased benefits. Because no portion of the accumulated postretirement benefit obligation includes any amounts attributed to future pay levels, the impact of accounting for the curtailment is limited to accelerating the recognition in net periodic postretirement benefit cost of the portion of remaining prior service cost included in accumulated other comprehensive income (15 percent x $100,000) related to those employees' future years of service. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-CABBA64F-8B33-4798-B90B-6CD5C0BACF72-low.gif) "December 31, 20X1" Before Negative Plan Amendment Negative Plan Amendment After Negative Plan Amendment Curtailment After Curtailment Accumulated postretirement benefit obligation (recognized liability) " $(850,000)" " $300,000 " " $(550,000)" " $(550,000)" Amounts recognized in accumulated other comprehensive income: Prior service cost " $400,000 " " $(300,000)" (a) " $100,000 " " $(15,000)" (b) " $85,000 " " $400,000 " " $(300,000)" " $100,000 " " $(15,000)" " $85,000 " (a) "The decrease in the accumulated postretirement benefit obligation due to a negative plan amendment is used first to reduce any existing prior service cost recognized in accumulated other comprehensive income, then to reduce any transition obligation recognized in accumulated other comprehensive income." (b) "A portion of prior service cost is recognized as a component of net periodic postretirement benefit cost because the net balance of $100,000 arose from a previous amendment and the current employees under age 45 who were participants at the date of the previous amendment are no longer participants. Accordingly, their future service has been eliminated as a basis for delayed recognition of the prior service cost as a component of net periodic postretirement benefit cost. If the negative prior service cost from the new amendment exceeded the prior service cost recognized in accumulated other comprehensive income from the previous amendment, none of the net negative prior service cost would be recognized as a component of net periodic postretirement benefit cost currently. The net negative prior service cost would be amortized over active participants' expected future service periods to full eligibility." ##### [715-60-55-159](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-159) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:b2fc3ac95f8c19cdcc4cac41fa4f4d4a2a1248c0616ac37dd8d4bab3e4f39770 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The journal entry to record the negative plan amendment is as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-E3C6C9C7-B0E2-4AAD-AC8B-619265A82AA8-low.gif) Postretirement benefit liability " $300,000 " Other comprehensive income " $300,000 " ##### [715-60-55-160](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-160) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:2f9237db8ef2b3748b7eb8533340141e7c2126401ea8f33c861a85da18f3d8af Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The journal entry to record the curtailment loss is as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-5A76C97D-365F-460C-9B66-5BCE3BFA093C-low.gif) Curtailment loss " $15,000 " Other comprehensive income " $15,000 " ##### [715-60-55-161](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-161) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:9fb66e734f39f54e72cd9b70559054b05be1cb60e04d5ad1a715bd2b3b5eb5cb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In general an employer should measure the postretirement benefit incentive to be received by employees in exchange for early termination as the difference 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 accrued benefits for employees terminating with the enhanced benefits and the accrued benefits for those employees assuming they terminated without the enhancements. ##### [715-60-55-162](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-162) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:e152002f1266bd3d278844aa03c6506f4512dabbc41c0b996d63f5ba98a27ad1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following simplified examples address situations involving a typical postretirement benefit plan under which participants become eligible for benefits upon attaining age 55 while in service and rendering 10 years of service and a plan under which benefits are based on years of service. To simplify the examples further, discounting and health care cost trends have been ignored. ##### [715-60-55-163](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-163) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:e908e1bd411bcd41c529a0e03c4f78ee32a8ad75eba706da0ffa6d73a32e8508 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Under Entity X's postretirement health care benefit plan, the annual cost of coverage is estimated to be $4,500 for retirees under age 65 and $1,500 for those 65 and older. The probability of employees retiring is 40 percent at age 57, 50 percent at age 62, and 10 percent at age 65. There is a 100 percent probability that retirees will die at age 75. Employees that retire on or after attaining age 55 while in service and rendering 10 or more years of service receive full employer-paid postretirement benefit coverage. ##### [715-60-55-164](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-164) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:be1a35e41887bd6dbac698d5301f47a2ca9862de32e0629fce829639f9091799 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As part of an incentive package to encourage employees to retire early, Entity X offers for a short period of time to add three years of age and three years of service to an employee's age and accumulated service credits to determine eligibility for postretirement benefits. Two employees, A and B, accept the offer. A is age 57 and has rendered 20 years of service. B is age 52 and has rendered 12 years of service. ##### [715-60-55-165](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-165) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:4798a365a1af3b99a00adecf568b3c1dbc0bdba382befae3e1e3986bba07cf83 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The expected postretirement benefit obligation for A and B before the offer is $36,150 each, determined as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-37494531-5E8F-458F-A3B3-C51980788B78-low.gif) Retirement Age Benefits Probability of Retirement Expected Postretirement Benefit Obligation Pre-Age 65 Age 65 to 75 57 "($4,500 x 8 yrs)" + "($1,500 x 10 yrs)" x 40% " $20,400 " 62 "($4,500 x 3 yrs)" + "($1,500 x 10 yrs)" x 50 " 14,250 " 65 "($1,500 x 10 yrs)" x 10 " 1,500 " " $36,150 " ##### [715-60-55-166](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-166) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:0646d84b09e64eae12aed4574e99ae402845a271cacb58e1fe5a944a1ecbc2cf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The accumulated postretirement benefit obligation for A and B before the offer is $36,150 and $28,920, respectively, determined as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-204C89FB-24C8-40B9-BAE6-22812401B696-low.gif) Employee Expected Postretirement Benefit Obligation Years of Service Rendered to Total Required Accumulated Postretirement Benefit Obligation A " $36,150 " x 18/18 (a) = " $36,150 " B " 36,150 " x 12/15 (b) = " 28,920 " " $72,300 " " $65,070 " (a) "A was hired at age 37 and, therefore, after 18 years of service has rendered the required 10 years of service and attained age 55 while in service to be fully eligible for benefits." (b) B must render 3 more years of service to attain age 55 while in service to be fully eligible for benefits. ##### [715-60-55-167](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-167) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:8131372c0aa844b4575279e1d61b2c1ae507602175b0a9a8485d5f7be0c869c5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The special termination postretirement benefit is measured as the difference between the following two amounts: 1. a The benefits attributed to past service based on what A and B receive if they retire at the earliest date at which they could retire and receive postretirement benefits under the plan, ignoring the special termination benefits. That date would be immediately for A and in 3 years (upon attaining age 55) for B. 2. b The benefits A and B receive if they accept the special termination benefits offer and retire immediately. ##### [715-60-55-168](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-168) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:0b047494e74276ea06776789b48fea879bad43fedd47372a9c5334d0449dfdc6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The calculation of those two amounts follows. - Accrued Benefits Ignoring Special Termination Benefits and Assuming A Retires Immediately and B Retires at Age 55 - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-806F4463-7803-4442-8D70-E02ED8AB8309-low.gif) Benefits Portion Earned Accrued Benefits Employee Pre-Age 65 Age 65 to 75 A "($4,500 x 8 yrs)" + "($1,500 x 10 yrs)" x 18/18 = " $51,000 " B "($4,500 x 10 yrs)" + "($1,500 x 10 yrs)" x 12/15 = " 48,000 " " $99,000 " - Accrued Benefits That Reflect Special Termination Benefits Assuming A and B Retire Immediately - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-683194B5-B2FF-4245-91CA-D9D76AC0DD69-low.gif) Benefits Portion Earned Accrued Benefits Employee Pre-Age 65 Age 65 to 75 A "($4,500 x 8 yrs)" + "($1,500 x 10 yrs)" x 100% = " $51,000 " B "($4,500 x 13 yrs)" + "($1,500 x 10 yrs)" x 100 = " 73,500 " " $124,500 " ##### [715-60-55-169](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-169) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:445582ab6e2734a07a4f14ebf40f9222651bf03492d9f02305f0b2a1d525991d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Thus, the cost of the special termination postretirement benefits is $25,500 ($124,500 - $99,000). If A and B represent a significant portion of Entity X's work force, the increase in the accumulated postretirement benefit obligation attributable solely to their early retirement, $33,930 ($99,000 - $65,070, both calculated without regard to the special termination benefits), would be accounted for as a curtailment. Otherwise, the $33,930 would be an experience loss. ##### [715-60-55-170](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-170) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:bf3baeb030a89afb14158420ba4ad67c9efbd3cd0e1f164d20ce7a71966c9a9b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The facts are the same as in Case A except that under the plan's terms retiring employees receive 2 1/2 percent coverage for each year of service. Thus, before the acceptance of special termination benefits, the full eligibility dates for A and B would be their expected retirement dates. ##### [715-60-55-171](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-171) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:029e9a09d6597213cfb12a24544aa0c0986a6f9617f8e87a9ff7decf29518332 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The accumulated postretirement benefit obligation for A and B before accepting the offer is $28,920, determined as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-15428D9A-BA88-46F2-847C-5098137D7C55-low.gif) At Retirement Service to Date/ Service to Retirement Accumulated Postretirement Benefit Obligation Age Years of Service Benefits Benefit Coverage Probability of Retirement Pre-Age 65 Age 65 to 75 Employee A 57 20 "($4,500 x 8 yrs)" + "($1,500 x 10 yrs)" x 50% x 40% x 20/20 = " $10,200 " 62 25 "($4,500 x 3 yrs)" + "($1,500 x 10 yrs)" x 62½ x 50 x 20/25 = " 7,125 " 65 28 "($1,500 x 10 yrs)" x 70 x 10 x 20/28 = 750 " 18,075 " Employee B 57 17 "($4,500 x 8 yrs)" + "($1,500 x 10 yrs)" x 42½% x 40% x 12/17 = " 6,120 " 62 22 "($4,500 x 3 yrs)" + "($1,500 x 10 yrs)" x 55 x 50 x 12/17 = " 4,275 " 65 25 "($1,500 x 10 yrs)" x 62½ x 10 x 12/17 = 450 " 10,845 " " $28,920 " ##### [715-60-55-172](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-172) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:783bc5401403b2555c5b7d25ef3255bae4ee91517e079c246c53c482ec175fea Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The special termination postretirement benefit is measured in the same manner as in Case A. ##### [715-60-55-173](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-173) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:bc5d6fff9bf6644fd7755fa3b060bc27526f25da1a3bd80fd7291287c8aef8f0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Accrued Benefits Ignoring Special Termination Benefits and Assuming A Retires Immediately and B Retires at Age 55 - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-2A14FA63-AF20-4140-990D-C06E1C16233D-low.gif) Benefits Benefit Coverage Portion Earned Accrued Benefits Employee Pre-Age 65 Age 65 to 75 A "($4,500 x 8 yrs)" + "($1,500 x 10 yrs)" x 50% x 20/20 = " $25,500 " B "($4,500 x 10 yrs)" + "($1,500 x 10 yrs)" x 37½ x 12/15 = " 18,000 " " $43,500 " ##### [715-60-55-174](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-174) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:01e03a2c4519881abed7f01104b06ff33befabfff8f66eede32831bf788798b4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Accrued Benefits That Reflect Special Termination Benefits Assuming A and B Retire Immediately - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-56B15C56-36A0-4612-88FE-DFC7DD1F0721-low.gif) Benefits Benefit Coverage Portion Earned Accrued Benefits Employee Pre-Age 65 Age 65 to 75 A "($4,500 x 8 yrs)" + "($1,500 x 10 yrs)" x 57½% x 100% = " $29,325 " B "($4,500 x 13 yrs)" + "($1,500 x 10 yrs)" x 37½ x 100 = " 27,563 " " $56,888 " ##### [715-60-55-175](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-175) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:a28a0739082679df056815966950be0c00319dbf33691d375dcbd6de6207a5f0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Thus, the cost of the special termination postretirement benefits is $13,388 ($56,888 - $43,500), and $14,580 ($43,500 - $28,920) would be accounted for as a curtailment or an experience loss. ### Split-Dollar Life Insurance Arrangements #### Implementation Guidance ##### [715-60-55-176](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-176) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:62fa3b93f7e8164db5469cd67ccdc04d423d4930b6babec81662189688edd45a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A typical [endorsement split-dollar life insurance](https://asc.understandingaccounting.org/glossary/e/#endorsement-split-dollar-life-insurance "A split-dollar life insurance arrangement in which the entity owns and controls the insurance policy. The employer enters into a separate agreement that splits the policy benefits between the employer and the employee. The employer owns the policy, controls all rights of ownership, and may terminate the insurance policy (and, in turn, the policy benefits promised to the employee). To effect the split-dollar arrangement, the employer endorses a portion of the death benefits to the employee (the employee designates a beneficiary for this portion of the death benefits). Upon the death of the employee, the employee's beneficiary typically receives the designated portion of the death benefits directly from the insurance entity and the employer receives the remainder of the death benefits.") arrangement may have the following terms: 1. a An employer purchases a life insurance policy to insure the life of an employee and pays a single premium at inception of the policy. Based on the insurance carrier's experience (for example, mortality) it can either charge or credit the policyholder for the negative or positive experience, respectively. The additional premium or credit is typically effectuated through an adjustment to the cash surrender value of the policy. 2. b The employer enters into a separate agreement that splits the policy [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.") between the employer and the employee. The employer owns the policy, controls all rights of ownership, and may terminate the insurance policy (and, in turn, the policy benefits promised to the employee). To effect the split-dollar arrangement, the employer endorses a portion of the death benefits to the employee (the employee designates a beneficiary for this portion of the death benefits). Upon the death of the employee, the employee's beneficiary typically receives the designated portion of the death benefits directly from the insurance entity and the employer receives the remainder of the death benefits. ##### [715-60-55-177](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-177) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:e9e8db7b237aa1672054e425563a21d962df1f065493dfc52f094beee9217299 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The employee's portion of the death benefits is commonly based on one of the following: 1. a Amounts that exceed the gross premiums paid by the employer 2. b Amounts that exceed the sum of the gross premiums paid by the employer and an additional fixed or variable investment return on those premiums 3. c The net insurance at the date of death (that is, the face amount of the death benefit under the policy, less the cash surrender value) 4. d Amounts equal to a multiple of the employee's base salary at retirement or death (for example, twice the employee's base salary). ##### [715-60-55-178](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-178) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:a51c05baade45cef26592608ee7f7bfbef9aec720b0b0d0774eca5139852da58 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. All available evidence should be considered in determining the substance of the arrangement, such as explicit written terms of the arrangement, communications made by the employer to the employee, the employer's past practices in administering the same or similar arrangements, and whether the employer is the primary obligor for the postretirement benefit. ##### [715-60-55-179](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-179) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:e00a1df24468f224b71cde0bb65d687997e59eeba65abad513cd430566b32678 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For example, if the employer agrees to provide a death benefit to the employee even in the event of default by the insurance entity, that would provide an indication that the promise made to the employee is to provide a postretirement death benefit. If the amount of the death benefit is not explicitly tied to an insurance policy, then the amount of the postretirement benefit should also be the amount of the death benefit promised to the employee. Conversely, if the terms of the arrangement are such that the employer has no obligation to the employee upon default of the insurance entity, that would provide an indication that the postretirement benefit is a promise to maintain a life insurance policy during the employee's retirement. In determining the appropriate measurement and [attribution](https://asc.understandingaccounting.org/glossary/a/#attribution "The process of assigning pension or other postretirement benefits or costs to periods of employee service.") of the cost and obligation under any particular arrangement, employers should refer to the guidance in this Subtopic, as applicable. ##### [715-60-55-180](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-180) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:e5ff57086fee819355212ba0fe62f70675f8358c55633458d6fdbfd9e5b17d9a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For example, if the terms of the arrangement are such that the employer has no obligation, either stated or implied, to provide loans to an employee to cover insurance policy premiums in the postretirement period, that may be an indication that there is no postretirement obligation. However, if the employer through the collateral assignment arrangement with the employee has an obligation, either stated or implied, to provide loans to an employee to cover the experience gains and losses of the insurance entity, that may indicate that an employer has a postretirement benefit obligation. In determining the appropriate measurement and attribution of the cost and obligation under any particular arrangement, employers should refer to the guidance in this Subtopic, as applicable. ##### [715-60-55-181](https://asc.understandingaccounting.org/asc/715/60/#715-60-55-181) Pending content: no Source downloaded (UTC): 2026-09-10T01:00:48.222Z to 2026-09-10T01:00:48.222Z Record version: sha256:2458fab19d596a6af546fece328b3a1e5b704a8c7829b3dfec53a003cc48311b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In determining the nature and substance of the arrangement, the employer should assess what future cash flows the employer is entitled to, if any, as well as the employee's obligation and ability to repay the employer. For example, if the arrangement limited the amount the employer could recover to the amount of the cash surrender value of the insurance policy held by the employee (or retiree), and if the employer's loan to the employee (or retiree) is greater than the cash surrender value of the insurance policy, at the balance sheet date the employer's asset would be limited to the amount of the cash surrender value of the insurance policy. Conversely, if the arrangement required the employee to repay the employer irrespective of the collateral assigned and the employer has determined that the employee loan is collectible and intends to seek recovery beyond the cash surrender value of the life insurance policy, the employer should recognize the value of the loan (including accrued interest, if applicable) considering the guidance in Subtopic 835-30. An employer should evaluate all available information in determining the nature and substance of the collateral assignment split-dollar life insurance arrangement.