ASC

ASC 715-958

Not-for-Profit Entities

715 Compensation—Retirement Benefits

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In brief

IntermediateCompensation and benefitsNot-for-profitPresentationDisclosure

This Subtopic adapts Topic 715 (pension and other postretirement benefits) for not-for-profit entities, which do not report other comprehensive income. Everywhere Topic 715 would require net gains or losses, prior service costs or credits, and transition assets or obligations to run through OCI/AOCI, an NFP instead recognizes those amounts as changes in net assets without donor restrictions that have not yet been reclassified into net periodic benefit cost. Those amounts, and the non-service components of net periodic benefit cost, are presented in separate line items outside any intermediate measure of operations (or performance indicator for business-oriented health care NFPs).

Key points (7)
  • An NFP applying the recognition provisions of paragraph 715-30-25-4 substitutes 'changes in net assets without donor restrictions arising from a defined benefit plan (or postretirement benefit plan) not yet reclassified as components of net periodic benefit cost' for AOCI references (715-958-25-1).
  • The same substitution applies to gains and losses, prior service costs or credits, and transition assets or obligations under Sections 715-30-35 and 715-60-35, and to paragraphs 715-30-35-65, 715-60-35-127, and 715-30-35-25(a) (715-958-35-1 through 35-5).
  • Gains and losses not immediately recognized in net periodic pension cost under 715-30-35-21 are recognized in accordance with 958-715-45-1 (715-958-35-6); NFPs not reporting OCI apply 715-30-35-79 through 35-96 in an analogous manner (715-958-35-7).
  • The net gain or loss, prior service costs or credits, and transition asset or obligation that would go to OCI are reported as a separate line item or items, apart from expenses, outside an intermediate measure of operations or performance indicator (954-220-45-5), within changes in net assets without donor restrictions (715-958-45-1).
  • Amounts previously so recognized are reclassified to net periodic pension cost under 715-30-35-3 through 35-28 or to net periodic postretirement benefit cost under 715-60-35-7 through 35-40, with the contra adjustment reported in the same line item (715-958-45-2).
  • Service cost is reported in the same line item(s) as other employee compensation costs (unless capitalized), while the other components defined in 715-30-35-4 and 715-60-35-9 are reported separately and outside any intermediate measure of operations; both are reported by functional expense classification per 958-720-45-2 and 958-720-45-15 (715-958-45-3).
  • Disclosures under Section 715-20-50 are made with substitutions: 'changes in net assets without donor restrictions' for OCI/AOCI and results of operations, and 'statement of activities' for 'statement of income' (715-958-50-1).

For students. The whole point of this Subtopic is translation: NFPs have no OCI, so every Topic 715 reference to OCI/AOCI becomes a change in (and cumulative amount within) net assets without donor restrictions. Students commonly confuse the two required separate line items — one for the non-service components of net periodic benefit cost, and a different one for gains/losses, prior service cost, and transition amounts not yet reclassified into that cost.

not-for-profit entitynet assets without donor restrictionsnet periodic pension costnet periodic postretirement benefit costprior service cost or credittransition asset or obligationintermediate measure of operationsperformance indicator

Machine-generated study aid for ASC 715-958. Check the source paragraphs below.

715-958-00Status

Source downloaded: .Record version aff7a60a0008. Effective date must be checked in the source.

715-958-00-1
The following table identifies the changes made to this Subtopic.
Paragraph Action Accounting Standards Update Date
Conditional Contribution Added Accounting Standards Update No. 2018-08 06/21/2018
Contribution Amended Accounting Standards Update No. 2018-08 06/21/2018
Contribution Amended Accounting Standards Update No. 2010-07 01/28/2010
Donor-Imposed Condition Added Accounting Standards Update No. 2018-08 06/21/2018
Donor-Imposed Restriction Added Accounting Standards Update No. 2016-14 08/18/2016
Functional Classification Superseded Accounting Standards Update No. 2016-14 08/18/2016
Functional Expense Classification Added Accounting Standards Update No. 2016-14 08/18/2016
Net Assets without Donor Restrictions Added Accounting Standards Update No. 2016-14 08/18/2016
Promise to Give Added Accounting Standards Update No. 2018-08 06/21/2018
Unrestricted Net Assets Superseded Accounting Standards Update No. 2016-14 08/18/2016
958-715-25-1 Amended Accounting Standards Update No. 2016-14 08/18/2016
958-715-35-1 through 35-5
 Amended Accounting Standards Update No. 2016-14 08/18/2016
958-715-45-1 Amended Accounting Standards Update No. 2017-07 03/10/2017
958-715-45-1 Amended Accounting Standards Update No. 2016-14 08/18/2016
958-715-45-2 Amended Accounting Standards Update No. 2017-07 03/10/2017
958-715-45-2 Amended Accounting Standards Update No. 2016-14 08/18/2016
958-715-45-3 Added Accounting Standards Update No. 2017-07 03/10/2017
958-715-50-1 Amended Accounting Standards Update No. 2018-14 08/28/2018
958-715-50-1 Amended Accounting Standards Update No. 2016-14 08/18/2016
958-715-55-4 Amended Accounting Standards Update No. 2017-07 03/10/2017
958-715-55-4 through 55-8
 Amended Accounting Standards Update No. 2016-14 08/18/2016
958-715-55-6 Amended Accounting Standards Update No. 2017-07 03/10/2017
958-715-55-7 Amended Accounting Standards Update No. 2017-07 03/10/2017
958-715-55-8 Superseded Accounting Standards Update No. 2017-07 03/10/2017

715-958-05Overview and Background

Source downloaded: .Record version 157331563ea9. Effective date must be checked in the source.

715-958-05-1
This Subtopic provides accounting and reporting guidance for retirement benefit plans sponsored by not-for-profit entities (NFPs). This guidance is essential to the application of Topic 715 by an NFP and shall be applied in conjunction with that Topic.

715-958-15Scope and Scope Exceptions

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Overall Guidance

715-958-15-1
This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 958-10-15, with specific qualifications noted below.

Transactions

715-958-15-2
This Subtopic applies to the same transactions outlined in Section 715-10-15.

715-958-25Recognition

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715-958-25-1
When a not-for-profit entity (NFP) applies the recognition provisions of the following paragraph, the references to net gains or losses, prior service costs or credits, and transition asset or obligation in accumulated other comprehensive income shall instead be to the gains or losses, the prior service costs or credits, and the transition asset or obligation that have been recognized as changes in net assets without donor restrictions arising from a defined benefit plan (or a postretirement benefit plan) but not yet reclassified as components of net periodic pension cost (or net periodic postretirement benefit cost):
  1. a
    Paragraph 715-30-25-4.

715-958-35Subsequent Measurement

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715-958-35-1
When a not-for-profit entity (NFP) applies the subsequent measurement provisions of the following Sections, the references to the prior service costs or credits included in accumulated other comprehensive income shall instead be to the prior service costs or credits that have been recognized as changes in net assets without donor restrictions arising from a defined benefit plan (or a postretirement benefit plan) but not yet reclassified as components of net periodic pension cost (or net periodic postretirement benefit cost):
  1. a
    Section 715-30-35
  2. b
    Section 715-60-35.
715-958-35-2
When an NFP applies the subsequent measurement guidance in the following Sections, the references to gains and/or losses included in accumulated other comprehensive income shall instead be to the gains and/or losses that have been recognized as changes in net assets without donor restrictions arising from a defined benefit plan (or a postretirement benefit plan) but not yet reclassified as components of net periodic pension cost (or net periodic postretirement benefit cost):
  1. a
    Section 715-30-35
  2. b
    Section 715-60-35.
715-958-35-3
When an NFP applies the subsequent measurement provisions of the following Sections, the references to the transition obligation or asset remaining in accumulated other comprehensive income shall instead be to the transition obligation or asset that has been recognized as a change in net assets without donor restrictions arising from a defined benefit plan (or a postretirement benefit plan) but not yet reclassified as a component of net periodic pension cost (or net periodic postretirement benefit cost):
  1. a
    Section 715-30-35
  2. b
    Section 715-60-35.
715-958-35-4
When an NFP applies the subsequent measurement provisions of the following paragraphs, references to amounts previously recognized in other comprehensive income shall be instead to amounts that have been recognized as a change in net assets without donor restrictions arising from a defined benefit plan (or a postretirement benefit plan) but not yet reclassified as components of net periodic pension cost (or net periodic postretirement benefit cost):
  1. a
    Paragraph 715-30-35-65
  2. b
    Paragraph 715-60-35-127.
715-958-35-5
When an NFP applies the subsequent measurement provisions of paragraph 715-30-35-25(a), references to the net balance included in accumulated other comprehensive income shall be instead to the net balance that has been recognized as a change in net assets without donor restrictions arising from a defined benefit plan but not yet reclassified as components of net periodic pension cost.
715-958-35-6
When an NFP applies the subsequent measurement guidance in paragraph 715-30-35-21, the gains and losses that are not recognized immediately as a component of net periodic pension cost shall be recognized in accordance with paragraph 958-715-45-1.
715-958-35-7
Not-for-profit employers that do not report other comprehensive income in accordance with the provisions of Topic 220, shall apply the provisions of paragraphs
715-30-35-79 through 35-91
and
715-30-35-92 through 35-96
in an analogous manner that is appropriate for their method of reporting financial performance and financial position.

715-958-45Other Presentation Matters

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715-958-45-1
A not-for-profit entity (NFP) shall recognize as a separate line item or items, outside an intermediate measure of operations, if one is presented, or a performance indicator as required by paragraph 954-220-45-5 for NFP business-oriented health care entities, within changes in net assets without donor restrictions, apart from expenses, the net gain or loss, the prior service costs or credits, and the transition asset or obligation that would be recognized in other comprehensive income pursuant to the following Sections:
  1. a
    Section 715-30-35
  2. b
    Section 715-60-35.
715-958-45-2
An NFP shall reclassify a portion of the net gain or loss, the prior service costs or credits, and the transition asset or obligation previously recognized in accordance with paragraph 958-715-45-1 as follows:
  1. a
    To net periodic pension cost, pursuant to the recognition and amortization provisions of paragraphs
    715-30-35-3 through 35-28
  2. b
    To net periodic postretirement benefit cost, pursuant to the recognition and amortization provisions of paragraphs
    715-60-35-7 through 35-40
    .
The contra adjustment or adjustments to the initially recognized net gain or loss, the prior service costs or credits, and the transition asset or obligation shall be reported in the same line item or items, outside an intermediate measure of operations, if one is presented, or a performance indicator as required by paragraph 954-220-45-5 for NFP business-oriented health care entities, within changes in net assets without donor restrictions, apart from expenses, as the initially recognized amounts as identified in paragraph 958-715-45-1.
715-958-45-3
An NFP shall report in the statement of activities:
  1. a
    The service cost component of net periodic pension cost and net periodic postretirement benefit cost in the same line item(s) as other compensation costs arising from services rendered by the pertinent employees during the period (except for the amount being capitalized, if appropriate, in connection with production or construction of an asset)
  2. b
    The other components as defined in paragraphs 715-30-35-4 and 715-60-35-9 separately from the service cost component and outside an intermediate measure of operations, if one is presented, within changes in net assets without donor restrictions. If a separate line item or items are used to present the other components, that line item or items shall be appropriately described and different from the separate line item or items used to present the net gain or loss, the prior service costs or credits, and the transition asset or obligation that would be recognized in other comprehensive income in accordance with Sections 715-30-35 and 715-60-35.
The service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost shall be reported by functional expense classification in accordance with paragraphs 958-720-45-2 and 958-720-45-15.

715-958-50Disclosure

Source downloaded: .Record version 5f5cbce102e6. Effective date must be checked in the source.

715-958-50-1
Not-for-profit entities (NFPs) shall make the following substitutions when applying the disclosure requirements of Section 715-20-50:
  1. a
    The references to the net gain or loss, net prior service cost or credit, and net transition asset or obligation recognized in other comprehensive income in paragraphs 715-20-50-1(i) and 715-20-50-5(h) shall instead be to such amounts recognized as changes in net assets without donor restrictions arising from a defined benefit plan but not yet included in net periodic benefit cost.
  2. b
    The references to reclassification adjustments of other comprehensive income in paragraphs 715-20-50-1(i) and 715-20-50-5(h) shall instead be to reclassifications to net periodic benefit cost of amounts previously recognized as changes in net assets without donor restrictions arising from a defined benefit plan but not included in net periodic benefit cost when they arose.
  3. c
    The references to the net gain or loss, net prior service cost or credit, and net transition asset or obligation recognized in accumulated other comprehensive income in the following paragraphs shall instead be to such amounts that have been recognized as changes in net assets without donor restrictions arising from a defined benefit plan but not yet reclassified as components of net periodic benefit cost:
    1. 1
      Paragraph 715-20-50-5(i)
    2. 2
      Paragraph 715-20-50-1(j)
    3. 3
      Subparagraph superseded by Accounting Standards Update No. 2018-14.
    4. 4
      Subparagraph superseded by Accounting Standards Update No. 2018-14.
  4. d
    The references to results of operations (including items of other comprehensive income) in paragraphs 715-20-50-1 and 715-20-50-5 shall instead be to changes in net assets without donor restrictions and the references to a statement of income in those paragraphs shall instead be to a statement of activities.

715-958-55Implementation Guidance and Illustrations

Source downloaded: .Record version 51b921576256. Effective date must be checked in the source.

715-958-55-1
This Section, which is an integral part of the requirements of this Subtopic, provides general guidance to be used by a not-for-profit entity (NFP) in reporting its retirement benefit plans.

Implementation Guidance

715-958-55-2
For reporting by a not-for-profit entity (NFP) that has a defined benefit pension plan that covers employees at the national and all local chapters to which each chapter is required to contribute based on a predetermined formula and for which plan assets are not segregated or restricted on a chapter-by-chapter basis, see paragraph 715-30-55-63.

Illustrations

715-958-55-3
This Example illustrates the guidance in Sections 958-715-35 and 958-715-45.
715-958-55-4
Not-for-Profit Entity A's (NFP A's) actuary prepares a 12-month projection of net periodic pension cost for July 1, 20X7, to June 30, 20X8. The funded status of NFP A's defined benefit pension plan as of June 30, 20X7, and June 30, 20X8, and amounts to be recognized as components of net periodic pension cost are shown in paragraph 958-715-55-5. The cumulative net loss not yet recognized as a component of net periodic pension cost is less than 10 percent of the greater of the projected benefit obligation and the market-related value of plan assets. No plan amendments affect the period from July 1, 20X7, to June 30, 20X8. Assumptions about benefit payments and contributions made by NFP A have not been included in this Example. During the fiscal year ending June 30, 20X8, NFP A does the following:
  1. a
    Recognizes the additional net loss as a change in net assets without donor restrictions and a change in the liability that reflects the underfunded status of the plan
  2. b
    Recognizes the amortization of the transition obligation as a component of net periodic pension cost
  3. c
    Recognizes the amortization of prior service cost as a component of net periodic pension cost
  4. d
    Recognizes net periodic pension cost within the appropriate functional expense categories for 20X8, with the service cost component reported as part of the intermediate measure of operations (for example, increase in net assets from operating activities) and the other components reported in a separate line item, outside the intermediate measure of operations presented by NFP A, within changes in net assets without donor restrictions.
715-958-55-5
These facts are illustrated in the following table.
  • 6/30/X7 6/30/X8 (in thousands) Projected benefit obligation " $(3,670)" " $(3,600)" Plan assets at fair value " 2,510 " " 2,385 " Funded status " $(1,160)" " $(1,215)" Items not yet recognized as a component of net periodic pension cost: Transition obligation $240 $200 Prior service cost 275 175 Net loss 315 365 $830 $740 Components of projected 12 months' net periodic pension cost for fiscal year 20X8: Service cost $110 Interest cost 120 Expected return on plan assets (125) Amortization of prior service cost 100 Amortization of net (gain) loss - Amortization of transition obligation 40 Net periodic pension cost $245
715-958-55-6
For the year ending June 30, 20X8, NFP A recognizes the amortizations of the transition obligation and prior service cost as components of net periodic pension cost and recognizes the additional loss arising during the year. The journal entries are as follows:
  1. a
    Recognize the additional loss in net assets without donor restrictions.
    • Net loss not yet recognized in net periodic pension cost 50 Liability for pension benefits 50
  2. b
    Recognize the amortization of the transition obligation in net periodic pension cost.
    • "Net periodic pension cost—transition obligation (functionalized)" 40 Transition obligation not yet recognized in net periodic pension cost 40
  3. c
    Recognize the amortization of prior service cost in net periodic pension cost.
    • "Net periodic pension cost—prior service cost (functionalized)" 100 "Prior service cost not yet recognized in net periodic pension cost" 100
  4. d
    Recognize service cost separately and recognize the interest cost and the expected return on plan assets together in net periodic pension cost.
    • Net periodic pension cost—service cost (functionalized) 110 Net periodic pension cost—interest cost and expected return on plan assets (functionalized) 5 (b) Liability for pension benefits 105 "(a) Footnote superseded. " (b) Equals $120 interest cost - $125 expected return on plan assets.
In its statement of activities, NFP A presents the service cost component by appropriate functional expense categories within the intermediate measure of operations (for example, increase in net assets from operating activities), within changes in net assets without donor restrictions, and presents the other components (encompassing the interest cost, the expected return on plan assets, and the amortizations of the transition obligation and prior service cost) in a separate line item (different from the separate line item discussed below for the items not yet recognized as components of net periodic pension cost) outside the intermediate measure of operations, within changes in net assets without donor restrictions. NFP A presents in a separate line item, outside the intermediate measure of operations, within changes in net assets without donor restrictions, the items (encompassing the net loss arising during the year and the changes in the transition obligation and prior service cost) not yet recognized as components of net periodic pension cost. NFP A would disclose, in the notes to financial statements, the information required by paragraph 958-715-50-1. NFP A also would disclose, in the notes to financial statements, an analysis of all expenses (including the service cost component and the other components of net periodic pension cost) by their nature and function in accordance with paragraphs 958-720-45-2 and 958-720-45-15.
715-958-55-7
The following statement of activities reflects how NFP A presents the service cost component and the other components of net periodic pension cost and the items not yet recognized as components of net periodic pension cost in its statement of activities, which presents an intermediate measure of operations.
  • Not-for-Profit Entity A Statement of Activities "Year Ended June 30, 20X8" (in thousands) Without Donor Restrictions With Donor Restrictions Total Operating: "Revenues, gains, and other support:" "Private contributions, other than bequests" " $60,000 " " $14,200 " " $74,200 " Bequests " 17,000 " " 17,000 " Government grants " 9,000 " " 9,000 " "Investment return appropriated by the governing board for operations" " 11,500 " " 1,000 " " 12,500 " Sales of educational materials " 2,000 " " 2,000 " Other " 2,000 " " 2,000 " Net assets released from restrictions " 17,000 " " (17,000)" - "Total revenues, gains, and other support" " 109,500 " " 7,200 " " 116,700 " Expenses: Program services: Research and medical support " 59,000 " " 59,000 " Public education " 9,500 " " 9,500 " Community service " 15,500 " " 15,500 " Total program services " 84,000 " " 84,000 " Supporting services: Fund raising " 15,000 " " 15,000 " Management and general " 9,000 " " 9,000 " Total supporting services " 24,000 " " 24,000 " Total expenses " 108,000 " " 108,000 " Increase in net assets from operating activities " 1,500 " " 7,200 " " 8,700 " Nonoperating: "Investment return, net" " 13,000 " " 1,100 " " 14,100 " "Investment return appropriated by the governing board for operations" " (11,500)" " (1,000)" " (12,500)" Contributions for endowment funds " 15,000 " " 15,000 " Other components of net periodic pension cost (135) (b) (135) "Pension-related changes other than net periodic pension cost" 90 (a) 90 Increase in net assets " 2,955 " " 22,300 " " 25,255 " "Net assets, beginning of year" " 147,110 " " 78,800 " " 225,910 " "Net assets, end of year" " $150,065 " " $101,100 " " $251,165 " "(a) Changes in the pension-related items not yet recognized in net periodic cost were due to $40 amortization of transition obligation, $100 amortization of prior service cost, and $50 net loss." "(b) Equals $40 amortization of transition obligation + $100 amortization of prior service cost + $120 interest cost - $125 expected return on plan assets."

715-958-65Transition and Open Effective Date Information

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715-958-65-1
Paragraph superseded on 03/23/2010 after the end of the transition period stated in FASB Statement No. 158, Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans, and FSP FAS 158-1.

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