# ASC 715-958-55: Compensation—Retirement Benefits — Not-for-Profit Entities — 55 Implementation Guidance and Illustrations Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/715/958/#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): 2026-09-10T01:02:44.737Z to 2026-09-10T01:02:44.737Z Record version: sha256:51b921576256993641c7ed34c33801f762052eb45b3d27d7a4ab7ccf8c912006 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 715-958-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/715/958/#55-implementation-guidance-and-illustrations) SEC content: no ##### [715-958-55-1](https://asc.understandingaccounting.org/asc/715/958/#715-958-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:02:44.737Z to 2026-09-10T01:02:44.737Z Record version: sha256:6d1c9c4e325ae4b5e117105a7e3265fa4522924194f33b170cec71c7d13e811b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/glossary/n/#not-for-profit-entity "An entity that possesses the following characteristics, in varying degrees, that distinguish it from a business entity: Contributions of significant amounts of resources from resource providers who do not expect commensurate or proportionate pecuniary return Operating purposes other than to provide goods or services at a profit Absence of ownership interests like those of business entities. Entities that clearly fall outside this definition include the following: All investor-owned entities Entities that provide dividends, lower costs, or other economic benefits directly and proportionately to their owners, members, or participants, such as mutual insurance entities, credit unions, farm and rural electric cooperatives, and employee benefit plans.") (NFP) in reporting its retirement benefit plans. #### Implementation Guidance ##### [715-958-55-2](https://asc.understandingaccounting.org/asc/715/958/#715-958-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:02:44.737Z to 2026-09-10T01:02:44.737Z Record version: sha256:1a98acc17ad2551eff0ce7f61fc684ad3623b83874993dfe18d8bc6e13e7fb62 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/715/30/#715-30-55-63). #### Illustrations ##### [715-958-55-3](https://asc.understandingaccounting.org/asc/715/958/#715-958-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:02:44.737Z to 2026-09-10T01:02:44.737Z Record version: sha256:cc37ab79212224abba8fc9b32eb4bab52e0e0abe59d4b13c52be8a446beb30b3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the guidance in Sections 958-715-35 and 958-715-45. ##### [715-958-55-4](https://asc.understandingaccounting.org/asc/715/958/#715-958-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:02:44.737Z to 2026-09-10T01:02:44.737Z Record version: sha256:34c8f8d9f85a3bf2f1d0d38d13ad4b71bc6db14a0ead98974d55c92439a7ba08 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/715/958/#715-958-55-5). 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](https://asc.understandingaccounting.org/glossary/c/#contribution "An unconditional transfer of cash or other assets, as well as unconditional promises to give, to an entity or a reduction, settlement, or cancellation of its liabilities in a voluntary nonreciprocal transfer by another entity acting other than as an owner. Those characteristics distinguish contributions from:Exchange transactions, which are reciprocal transfers in which each party receives and sacrifices approximately commensurate valueInvestments by owners and distributions to owners, which are nonreciprocal transfers between an entity and its ownersOther nonreciprocal transfers, such as impositions of taxes or legal judgments, fines, and thefts, which are not voluntary transfers. In a contribution transaction, the resource provider often receives value indirectly by providing a societal benefit although that benefit is not considered to be of commensurate value. In an exchange transaction, the potential public benefits are secondary to the potential direct benefits to the resource provider. The term contribution revenue is used to apply to transactions that are part of the entity's ongoing major or central activities (revenues), or are peripheral or incidental to the entity (gains). See also Inherent Contribution and Conditional Contribution.") 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](https://asc.understandingaccounting.org/glossary/n/#net-assets-without-donor-restrictions "The part of net assets of a not-for-profit entity that is not subject to donor-imposed restrictions (donors include other types of contributors, including makers of certain grants).") 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](https://asc.understandingaccounting.org/asc/715/958/#715-958-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:02:44.737Z to 2026-09-10T01:02:44.737Z Record version: sha256:24808ecec820749f9a9513de91ce82cc2c956fe6dcdf159845bbe4d35e66c43b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. These facts are illustrated in the following table. - ![](https://asc.understandingaccounting.org/asc-img/GUID-00F3E019-32A7-4BDD-B829-2E264795C0EE-low.gif) 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](https://asc.understandingaccounting.org/asc/715/958/#715-958-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:02:44.737Z to 2026-09-10T01:02:44.737Z Record version: sha256:dcbc81bdb4f6ee51c4ef2cbd33234f3c4ede645997eb169ce14cddee9d943f6e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. - ![](https://asc.understandingaccounting.org/asc-img/GUID-15741455-49DE-4F4F-8C3B-FA3454835F1E-low.gif) 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. - ![](https://asc.understandingaccounting.org/asc-img/GUID-00C9B11D-4518-4221-A003-C052C08CFFA6-low.gif) "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. - ![](https://asc.understandingaccounting.org/asc-img/GUID-E2C73C65-0D1C-461D-8369-78A2CA2D528E-low.gif) "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. - ![](https://asc.understandingaccounting.org/asc-img/GUID-B13ABB02-0C2A-47EB-87C3-21AC7BE2EB55-low.gif) 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](https://asc.understandingaccounting.org/asc/715/958/#715-958-50-1). 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](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-2) and [958-720-45-15](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-15). ##### [715-958-55-7](https://asc.understandingaccounting.org/asc/715/958/#715-958-55-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:02:44.737Z to 2026-09-10T01:02:44.737Z Record version: sha256:45a825b8f2def05ef2614e405f6bdfb484d48c50e7e36e98e71ccde36dd9d1b0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. - ![](https://asc.understandingaccounting.org/asc-img/GUID-605828B5-FCAE-4B8B-9D6F-A457325C722B-low.gif) 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." ##### [715-958-55-8](https://asc.understandingaccounting.org/asc/715/958/#715-958-55-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:02:44.737Z to 2026-09-10T01:02:44.737Z Record version: sha256:5c3e005e1774f3c7875c1162f20fbeac13b581ea72a3f5022ae2000ebe879433 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2017-07](https://asc.understandingaccounting.org/updates/asu-2017-07/).