# ASC 715-980: Compensation—Retirement Benefits — Regulated Operations Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/715/980/) 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): 2026-09-10T01:02:48.718Z to 2026-09-10T01:03:11.702Z Record version: sha256:e30c5398aa4902cf36430aa709fb389442cf43923fc3398a4c0b97b04d51437b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 715-980: Compensation—Retirement Benefits — Regulated Operations ### Machine-generated study aids ```json { "summary": "ASC 715-980 tells rate-regulated entities how to account for the difference between net periodic pension cost (715-30) or net periodic postretirement benefit cost (715-60) and the amounts of those costs allowed for rate-making purposes. The regulator's actions create a regulatory asset (deferred cost whose recovery is probable) or a liability (unearned revenue collected for future costs), which changes only the timing of expense recognition, not the underlying 715-30/715-60 measurement. Deferral of 715-60 costs as a regulatory asset is permitted only if strict criteria about the rate order, five-year phase-in, roughly 20-year deferral-recovery period, and non-increasing rate escalation are met.", "key_points": [ "The difference between net periodic pension cost under Subtopic 715-30 and pension cost allowed for rate-making purposes is recognized as an asset or liability created by the actions of the regulator; those actions change only the timing of expense recognition (715-980-25-1).", "An employer with regulated operations must apply 715-30 for financial reporting even if a different method is used to determine allowable pension cost for rate-making purposes (715-980-55-2); the difference is an asset if 980-340-25-1 criteria are met or a liability if the 980-405-25-1(b) situation exists (715-980-55-4).", "No regulatory asset for 715-60 costs may be recorded for a continuing plan if the regulator continues to include other postretirement benefit costs in rates on a pay-as-you-go basis (715-980-25-4).", "For a continuing plan, a regulatory asset for the 715-60 vs. rate-recovery difference is recognized only if recovery of future revenue at least equal to the deferred cost is probable and all four criteria of 715-980-25-5(b) are met: an enabling rate order/policy statement, inclusion of annual 715-60 costs in rates within about five years of adoption, a combined deferral-recovery period not exceeding about 20 years, and scheduled rate increases that do not escalate year over year.", "For discontinued plans (no current service cost), a regulatory asset is recorded if it is probable that future revenue at least equal to the deferred 715-60 costs will be recovered in rates within about 20 years after adoption, and pay-as-you-go rate recovery may continue (715-980-25-7).", "If the 715-980-25-5 criteria are not met initially but are met later, the regulatory asset is recognized in the period the criteria are met (715-980-25-8).", "A regulator cannot eliminate a liability it did not impose, so the requirement to recognize a plan's underfunded status as a liability under 715-30-25-1 through 25-2 is unaffected by regulation (715-980-55-7); disclosure must describe the regulatory treatment, pending regulatory action, deferred 715-60 costs at the balance sheet date, and the expected recovery period (715-980-50-1)." ], "categories": [ "Compensation and benefits", "Industry-specific", "Recognition", "Disclosure" ], "audience_level": "advanced", "student_note": "This is a narrow utility-industry overlay: the pension/OPEB expense in the income statement is still the 715-30/715-60 amount, and the regulator's actions only shift timing via a regulatory asset or unearned-revenue liability. The common misunderstanding is thinking rate-regulated entities may report the rate-making pension cost as their expense, or that a regulator's pay-as-you-go treatment can eliminate the recognized underfunded status of the plan.", "related_topics": [ "980-10", "980-340", "980-405", "715-30", "715-60", "715-20" ], "key_concepts": [ "regulatory asset", "rate-making purposes", "net periodic pension cost", "net periodic postretirement benefit cost", "unearned revenue liability", "probable future rate recovery", "deferral-recovery period", "discontinued plan" ] } ``` Source downloaded (UTC): 2026-09-10T01:02:48.718Z to 2026-09-10T01:02:48.718Z Record version: sha256:90ff48a2088668665f648ba3dacbe53cbc7dc2e0b0660a7117872038f036d407 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 715-980-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/715/980/#00-status) SEC content: no ##### [715-980-00-1](https://asc.understandingaccounting.org/asc/715/980/#715-980-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:02:48.718Z to 2026-09-10T01:02:48.718Z Record version: sha256:4ed53217fbcaf9bba75cd47270545456100012304c2f124f14e146eb32fc0200 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
Defined Benefit PlanAddedAccounting Standards Update No. 2014-0603/14/2014
980-715-15-1AmendedAccounting Standards Update No. 2017-0703/10/2017
980-715-45-1AddedAccounting Standards Update No. 2017-0703/10/2017
980-715-55-7AmendedAccounting Standards Update No. 2014-0603/14/2014
980-715-55-10AmendedAccounting Standards Update No. 2017-0703/10/2017
980-715-55-25AmendedAccounting Standards Update No. 2017-0703/10/2017
Source downloaded (UTC): 2026-09-10T01:02:52.334Z to 2026-09-10T01:02:52.334Z Record version: sha256:e3e373ca9a59dad7db887d7313f9948e747310ecb611424765028059db85a584 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 715-980-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/715/980/#05-overview-and-background) SEC content: no ##### [715-980-05-1](https://asc.understandingaccounting.org/asc/715/980/#715-980-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:02:52.334Z to 2026-09-10T01:02:52.334Z Record version: sha256:e4487404b76fb003b62d27a7ae4423baca07b9816a12122dc048755d8e54e4f2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance for compensation related to pension costs and other postretirement benefit costs for entities with regulated operations. #### Postretirement Pension Cost ##### [715-980-05-2](https://asc.understandingaccounting.org/asc/715/980/#715-980-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:02:52.334Z to 2026-09-10T01:02:52.334Z Record version: sha256:f98d7bf6665c6843d7abd4eb3832d4f96030b37d641f64a5699384061905a2cd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance for the difference between net periodic pension cost as defined in Subtopic 715-30 and amounts of pension cost considered for rate-making purposes as an asset or a liability created by the actions of the regulator. #### Other Postretirement Benefit Cost ##### [715-980-05-3](https://asc.understandingaccounting.org/asc/715/980/#715-980-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:02:52.334Z to 2026-09-10T01:02:52.334Z Record version: sha256:2c4fbe8057bfaffc1f6e36178912c3d8dd24a33b4fb1a17de890e1ef5d8c812b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance for the difference between net periodic postretirement benefit cost as defined in Subtopic 715-60 and amounts of postretirement benefit cost considered for rate-making purposes as an asset or a liability created by the actions of the regulator. Source downloaded (UTC): 2026-09-10T01:02:54.639Z to 2026-09-10T01:02:54.639Z Record version: sha256:76882b100ce62108c88631d07b63c83acfcbba6d7d89978a5e7e65afcb671dac Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 715-980-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/715/980/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [715-980-15-1](https://asc.understandingaccounting.org/asc/715/980/#715-980-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:02:54.639Z to 2026-09-10T01:02:54.639Z Record version: sha256:d5a952b7128b5cbc803bb474e9bee74c9f724154e04ef7c9e9d4b9d9c2b022fd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 980-10-15. Accordingly, the guidance related to the accounting for regulatory assets related to other postretirement benefit costs (see Subtopic 715-60) is for rate-regulated entities that meet the criteria for applying this Topic. In addition, the provisions of paragraphs [715-30-35-7A](https://asc.understandingaccounting.org/asc/715/30/#715-30-35-7A) and [715-60-35-10A](https://asc.understandingaccounting.org/asc/715/60/#715-60-35-10A) shall not change the accounting for regulatory assets related to postretirement pension cost and other postretirement benefit cost for rate-regulated entities. Source downloaded (UTC): 2026-09-10T01:03:00.783Z to 2026-09-10T01:03:00.783Z Record version: sha256:b5ce7482f7f2981e21544289029d9a7256a0b55eebcf329fb2c642b4b62974fe Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 715-980-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/715/980/#25-recognition) SEC content: no #### Postretirement Pension Cost ##### [715-980-25-1](https://asc.understandingaccounting.org/asc/715/980/#715-980-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:03:00.783Z to 2026-09-10T01:03:00.783Z Record version: sha256:dbeac4df65c6b25eceedba7e68273a1f946ca57d3d0c806dd960e70084a2a11b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic requires that the difference between net periodic pension cost as defined in Subtopic 715-30 and amounts of pension cost considered for rate-making purposes be recognized as an asset or a liability created by the actions of the regulator. Those actions of the regulator change the timing of recognition of net pension cost as an expense; they do not otherwise affect the requirements of that Subtopic. ##### [715-980-25-2](https://asc.understandingaccounting.org/asc/715/980/#715-980-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:03:00.783Z to 2026-09-10T01:03:00.783Z Record version: sha256:5ed95ca828de4017e7bd959af50827fb1051883dc9fe6687cf6b6d065873d24a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Example 1 (see paragraph [980-715-55-9](https://asc.understandingaccounting.org/asc/715/980/#715-980-55-9)) illustrates accounting for pensions by an employer with regulated operations. #### Other Postretirement Benefit Cost ##### [715-980-25-3](https://asc.understandingaccounting.org/asc/715/980/#715-980-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:03:00.783Z to 2026-09-10T01:03:00.783Z Record version: sha256:ac0f8bc59d0e6263714a398f41add3454b9bcb993f5ef7744efa2872ce3c80d3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For purposes of this Subtopic, other postretirement benefits refer to all forms of benefits, other than pensions, provided by an employer to retirees. ##### [715-980-25-4](https://asc.understandingaccounting.org/asc/715/980/#715-980-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:03:00.783Z to 2026-09-10T01:03:00.783Z Record version: sha256:153d7691921001926063b6f4c855f47dc596e4f2632f2c410b470ef12e855241 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For continuing postretirement benefit plans, a regulatory asset related to Subtopic 715-60 costs shall not be recorded if the regulator continues to include other postretirement benefit costs in rates on a pay-as-you-go basis. The application of this Topic requires that a rate-regulated entity's rates be designed to recover the specific entity's costs of providing the regulated service or product. Accordingly, an entity's cost of providing a regulated service or product includes the costs provided for in Subtopic 715-60. ##### [715-980-25-5](https://asc.understandingaccounting.org/asc/715/980/#715-980-25-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:03:00.783Z to 2026-09-10T01:03:00.783Z Record version: sha256:fa4628dea5fdb304a8f0bba42d2badce3c9e9be084c0ea0d335dcded0d5d5088 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For a continuing postretirement benefit plan a rate-regulated entity shall recognize a regulatory asset for the difference between Subtopic 715-60 costs and other postretirement benefit costs included in the entity's rates if the entity does both of the following: 1. a Determines that it is probable that future revenue in an amount at least equal to the deferred cost (regulatory asset) will be recovered in rates 2. b Meets all of the following criteria: 1. 1 The rate-regulated entity's regulator has issued a rate order or issued a policy statement or a generic order applicable to entities within the regulator's jurisdiction that allows both for the deferral of Subtopic 715-60 costs and for the subsequent inclusion of those deferred costs in the entity's rates. 2. 2 The annual Subtopic 715-60 costs (including amortization of the transition obligation) will be included in rates within approximately five years from the date of adoption of that Subtopic. The change to full accrual accounting may take place in steps, but the period for deferring additional amounts shall not exceed approximately five years. 3. 3 The combined deferral-recovery period authorized by the regulator for the regulatory asset shall not exceed approximately 20 years from the date of adoption of Subtopic 715-60. To the extent that the regulator imposes a deferral-recovery period for those costs provided for in Subtopic 715-60 greater than approximately 20 years, any proportionate amount of such costs not recoverable within approximately 20 years shall not be recognized as a regulatory asset. 4. 4 The percentage increase in rates scheduled under the regulatory recovery plan for each future year shall be no greater than the percentage increase in rates scheduled under the plan for each immediately preceding year. This criterion is similar to that required for phase-in plans in paragraph [980-340-25-3(d)](https://asc.understandingaccounting.org/asc/340/980/#340-980-25-3). Recovery of the regulatory asset in rates on a straight-line basis would meet this criterion. ##### [715-980-25-6](https://asc.understandingaccounting.org/asc/715/980/#715-980-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:03:00.783Z to 2026-09-10T01:03:00.783Z Record version: sha256:086502ed4c32fa411099017e4e3dfed364cc92da316c78d08361dd19c1bc3cd8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This guidance applies to rate-regulated entities that elect to immediately recognize their postretirement benefit transition obligation under Subtopic 715-60 as well as those entities that elect to delay the recognition of and amortize their postretirement benefit transition obligation in accordance with that Subtopic. ##### [715-980-25-7](https://asc.understandingaccounting.org/asc/715/980/#715-980-25-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:03:00.783Z to 2026-09-10T01:03:00.783Z Record version: sha256:e7a043b976f65ddd79eca7a780a31a8f308deb486608fd406ae6f93e44627399 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For discontinued plans, a regulatory asset related to Subtopic 715-60 costs shall be recorded if it is probable that future revenue in an amount at least equal to any deferred that Subtopic costs will be recovered in rates within approximately 20 years following the adoption of that Subtopic. Rate recovery during that period may continue on a pay-as-you-go basis. For purposes of this guidance, a discontinued plan is one that results in employees not earning additional benefits for future service (that is, one that has no current service costs). ##### [715-980-25-8](https://asc.understandingaccounting.org/asc/715/980/#715-980-25-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:03:00.783Z to 2026-09-10T01:03:00.783Z Record version: sha256:9f95828b282a56a18739386dab47c1ca723c662554905ee1dcd3bef1142dca48 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If an entity does not initially meet the criteria established in Section 980-715-25 but meets those criteria in a subsequent period, then a regulatory asset related to Subtopic 715-60 costs shall be recognized in the period those criteria are met. Source downloaded (UTC): 2026-09-10T01:03:02.875Z to 2026-09-10T01:03:02.875Z Record version: sha256:4b53c4e1284c6cab40cd526e4ad801a7efac2ead9c773831afdebd64754757f6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 715-980-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/715/980/#45-other-presentation-matters) SEC content: no ##### [715-980-45-1](https://asc.understandingaccounting.org/asc/715/980/#715-980-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:03:02.875Z to 2026-09-10T01:03:02.875Z Record version: sha256:977c68142b825a387cc9733bf7dd08c6c305e02e2017b7ed7bb344024c27487e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A rate-regulated entity shall present the amount of net periodic pension cost and net periodic postretirement benefit cost in accordance with the provisions of paragraph [715-20-45-3A](https://asc.understandingaccounting.org/asc/715/20/#715-20-45-3A). Source downloaded (UTC): 2026-09-10T01:03:06.373Z to 2026-09-10T01:03:06.373Z Record version: sha256:db80c11e3ad96a6a30a3625ab1415b41de8b15482a5b7fafd27b1cdea3619889 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 715-980-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/715/980/#50-disclosure) SEC content: no #### Regulatory Treatment of Postretirement Benefit Costs ##### [715-980-50-1](https://asc.understandingaccounting.org/asc/715/980/#715-980-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:03:06.373Z to 2026-09-10T01:03:06.373Z Record version: sha256:358d56be0efaab8400a23e6b70ffd1911d0763a6fee8cf559b04ba9e05011ccc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A rate-regulated entity shall disclose in its financial statements a description of the regulatory treatment of postretirement benefit costs, the status of any pending regulatory action, the amount of any Subtopic 715-60 costs deferred as a regulatory asset at the balance sheet date, and the period over which the deferred amounts are expected to be recovered in rates. Source downloaded (UTC): 2026-09-10T01:03:08.836Z to 2026-09-10T01:03:08.836Z Record version: sha256:3aabc5d48d3b4f29e9c40e24527243e2fed607f147f0d199ec9015dafd54ce31 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 715-980-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/715/980/#55-implementation-guidance-and-illustrations) SEC content: no ##### [715-980-55-1](https://asc.understandingaccounting.org/asc/715/980/#715-980-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:03:08.836Z to 2026-09-10T01:03:08.836Z Record version: sha256:c55ef6f8d0adfdb3b0a8d90cbf79d7a8a24d7aa6069d1b43ad735e3501759609 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. All implementation guidance and illustrations assume that the entity meets the criteria of paragraph [980-10-15-2](https://asc.understandingaccounting.org/asc/980/10/#980-10-15-2) for the application of this Topic by the entity; thus recovery of any cost is probable if that cost is designated for future recovery by the regulator. #### Implementation Guidance ##### [715-980-55-2](https://asc.understandingaccounting.org/asc/715/980/#715-980-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:03:08.836Z to 2026-09-10T01:03:08.836Z Record version: sha256:3318482c7bfeaf0af0dba78412d29cc6990e27ce9c9d59c0e4163d08b5994b4b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An employer with regulated operations shall account for the effects of applying Subtopic 715-30 for financial reporting purposes even if another method of accounting for pensions is used for determining allowable pension cost for rate-making purposes. ##### [715-980-55-3](https://asc.understandingaccounting.org/asc/715/980/#715-980-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:03:08.836Z to 2026-09-10T01:03:08.836Z Record version: sha256:5681e7ffad7fa8123f27280abb9b7e9169bee26db98c57b5938086e0d4f23c9a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As indicated in paragraph [980-715-25-1](https://asc.understandingaccounting.org/asc/715/980/#715-980-25-1), Subtopic 715-30 applies to employers with regulated operations. ##### [715-980-55-4](https://asc.understandingaccounting.org/asc/715/980/#715-980-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:03:08.836Z to 2026-09-10T01:03:08.836Z Record version: sha256:01e30a1cc9157a05699e74ed005e424bda2ecc8c756afaea5759538f628131da Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If this Subtopic applies to the employer, and the amount of net periodic pension cost determined under the method used for rate-making purposes differs from that determined under Subtopic 715-30, the difference would be either of the following: 1. a An asset if the criteria in paragraph [980-340-25-1](https://asc.understandingaccounting.org/asc/340/980/#340-980-25-1) are met 2. b A liability if the situation is as described in paragraph [980-405-25-1(b)](https://asc.understandingaccounting.org/asc/405/980/#405-980-25-1). ##### [715-980-55-5](https://asc.understandingaccounting.org/asc/715/980/#715-980-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:03:08.836Z to 2026-09-10T01:03:08.836Z Record version: sha256:af17485072a5476c1e0d6054ee956045850dccde0c0babdbf37f91ca98f88de9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Usually, continued use of different methods for rate-making purposes and general-purpose external financial reporting purposes would result in either the criteria in paragraph [980-340-25-1](https://asc.understandingaccounting.org/asc/340/980/#340-980-25-1) being met or the situation described in paragraph [980-405-25-1(b)](https://asc.understandingaccounting.org/asc/405/980/#405-980-25-1). However, if pension cost determined in accordance with Subtopic 715-30 exceeds pension cost determined in accordance with the method used in setting current rates, the criteria in paragraph [980-340-25-1](https://asc.understandingaccounting.org/asc/340/980/#340-980-25-1) would not be met if both of the following conditions exist: 1. a It is probable that the regulator soon will accept a change for rate-making purposes so that pension cost is determined in accordance with Subtopic 715-30. 2. b It is not probable that the regulator will provide revenue to recover the excess cost that results from the use of Subtopic 715-30 for financial reporting purposes during the period between the date that the employer adopts that Subtopic and the rate case implementing the change. ##### [715-980-55-6](https://asc.understandingaccounting.org/asc/715/980/#715-980-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:03:08.836Z to 2026-09-10T01:03:08.836Z Record version: sha256:67baa743a7fd4bb0cb9e503978586edb87027af7260791d64460fb1649affb69 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Similarly, if pension cost determined in accordance with the method used in setting current rates exceeds pension cost determined in accordance with Subtopic 715-30, the situation would not be as described in paragraph [980-405-25-1(b)](https://asc.understandingaccounting.org/asc/405/980/#405-980-25-1) if it is probable that all of the following conditions exist: 1. a The regulator soon will accept a change for rate-making purposes so that pension cost is determined in accordance with Subtopic 715-30. 2. b The regulator will not hold the employer responsible for the costs that were intended to be recovered by the current rates and that have been deferred by the change in method. 3. c The regulator will provide revenue to recover those same costs when they are eventually recognized under the method required by Subtopic 715-30. ##### [715-980-55-7](https://asc.understandingaccounting.org/asc/715/980/#715-980-55-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:03:08.836Z to 2026-09-10T01:03:08.836Z Record version: sha256:827240165fad63bb84becfb552e3dcff22dbbd019aa3f8ec8bbbeea7d43ca178 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Because a regulator cannot eliminate a liability that was not imposed by its actions, the need to recognize the underfunded status of a [defined benefit plan](https://asc.understandingaccounting.org/glossary/d/#defined-benefit-plan "A defined benefit plan provides participants with a determinable benefit based on a formula provided for in the plan. Defined benefit health and welfare plans—Defined benefit health and welfare plans specify a determinable benefit, which may be in the form of a reimbursement to the covered plan participant or a direct payment to providers or third-party insurers for the cost of specified services. Such plans may also include benefits that are payable as a lump sum, such as death benefits. The level of benefits may be defined or limited based on factors such as age, years of service, and salary. Contributions may be determined by the plan's actuary or be based on premiums, actual claims paid, hours worked, or other factors determined by the plan sponsor. Even when a plan is funded pursuant to agreements that specify a fixed rate of employer contributions (for example, a collectively bargained multiemployer plan), such a plan may nevertheless be a defined benefit health and welfare plan if its substance is to provide a defined benefit. Defined benefit pension plan—A pension plan that defines an amount of pension benefit to be provided, usually as a function of one or more factors such as age, years of service, or compensation. Any pension plan that is not a defined contribution pension plan is, for purposes of Subtopic 715-30, a defined benefit pension plan. Defined benefit postretirement plan—A plan that defines postretirement benefits in terms of monetary amounts (for example, $100,000 of life insurance) or benefit coverage to be provided (for example, up to $200 per day for hospitalization, or 80 percent of the cost of specified surgical procedures). Any postretirement benefit plan that is not a defined contribution postretirement plan is, for purposes of Subtopic 715-60, a defined benefit postretirement plan. (Specified monetary amounts and benefit coverage are collectively referred to as benefits.)") as a liability under paragraphs [715-30-25-1 through 25-2](https://asc.understandingaccounting.org/asc/715/30/#715-30-25-1) is unaffected by regulation. ##### [715-980-55-8](https://asc.understandingaccounting.org/asc/715/980/#715-980-55-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:03:08.836Z to 2026-09-10T01:03:08.836Z Record version: sha256:d627e81941eaab87dca247251e0201675cee67883c37d7c1d0de8f4517b5f59c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Example 1 (paragraphs [980-715-55-9](https://asc.understandingaccounting.org/asc/715/980/#715-980-55-9)) for the employer's accounting when paragraphs [980-340-25-1](https://asc.understandingaccounting.org/asc/340/980/#340-980-25-1) and [980-405-25-1(b)](https://asc.understandingaccounting.org/asc/405/980/#405-980-25-1) apply. #### Illustrations ##### [715-980-55-9](https://asc.understandingaccounting.org/asc/715/980/#715-980-55-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:03:08.836Z to 2026-09-10T01:03:08.836Z Record version: sha256:f621411b01d4834a76019cae01a2837d4974fc25dcc71a7a3b359fd3ce80b3cc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the guidance for recognition of postretirement pension cost in paragraph [980-715-25-1](https://asc.understandingaccounting.org/asc/715/980/#715-980-25-1). ##### [715-980-55-10](https://asc.understandingaccounting.org/asc/715/980/#715-980-55-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:03:08.836Z to 2026-09-10T01:03:08.836Z Record version: sha256:33efb6ed6bff68785f4a70a6bad02a10e11d4ce75b7709aa555dcd0dcbae123b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An employer with regulated operations sponsors a defined benefit pension plan that is accounted for pursuant to Subtopic 715-30. To simplify the Example, it is assumed that there are no remaining differences between amounts previously recognized as net periodic pension cost and amounts allowable for rate-making purposes. The employer's determination of net periodic pension cost under that Subtopic, however, differs from that allowable for rate-making purposes in the timing of recognition of net periodic pension cost as an expense. The following schedule shows the amounts under both bases for the years 20X0-20X3. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-BA65EB87-B8E3-42E2-AB73-54E8C03530E5-low.gif) Year Net periodic pension cost under Subtopic 715-20 Allowable for Rate-Making Difference for the Period Cumulative Difference 20X0 $120 $200 $(80) $(80) 20X1 200 100 100 20 20X2 170 140 30 50 20X3 120 200 (80) (30) ##### [715-980-55-11](https://asc.understandingaccounting.org/asc/715/980/#715-980-55-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:03:08.836Z to 2026-09-10T01:03:08.836Z Record version: sha256:393d395bf75a8b161c5890372cb2d8bd77aa8313765ebe53ff4f035c22717d4c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In 20X0, the amount allowable for rate-making purposes exceeds net periodic pension cost determined under Subtopic 715-30. In that case, paragraph [980-405-25-1(b)](https://asc.understandingaccounting.org/asc/405/980/#405-980-25-1) requires the amount determined under Subtopic 715-30 ($120) to be recognized as net periodic pension cost in the employer's financial statements. ##### [715-980-55-12](https://asc.understandingaccounting.org/asc/715/980/#715-980-55-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:03:08.836Z to 2026-09-10T01:03:08.836Z Record version: sha256:44dcbcaf6f02e1025e5577fc732beef18554df0dfc63b2c81e6a175bfd46c9b7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The difference ($80) between net periodic pension cost determined under Subtopic 715-30 ($120) and that allowable for rate-making purposes ($200) is recognized as a liability (unearned revenue) and represents an amount collected or collectible for recovery of future pension cost. When that pension cost is incurred for financial reporting purposes, the liability (unearned revenue) shall be eliminated and revenue shall be recognized. ##### [715-980-55-13](https://asc.understandingaccounting.org/asc/715/980/#715-980-55-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:03:08.836Z to 2026-09-10T01:03:08.836Z Record version: sha256:877d9064bfe2c58bebbddb7c7c656b31bb3ae9166326bc7329a83c8f432f8736 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The journal entries to account for the accrual of net periodic pension cost and the contribution made to the pension plan during the year are as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-CA314FFC-7CBE-4A43-9ABA-22943F5BE1C4-low.gif) Journal Entry 1 Net periodic pension cost $120 Revenue 80 Pension liability $120 Unearned revenue 80 - To record net periodic pension cost for the period and the liability created by actions of the regulator - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-F12F49A4-9130-460B-B197-472449BFAC1B-low.gif) Journal Entry 2 Pension liability $200 Cash $200 - To record contribution to pension plan ##### [715-980-55-14](https://asc.understandingaccounting.org/asc/715/980/#715-980-55-14) Pending content: no Source downloaded (UTC): 2026-09-10T01:03:08.836Z to 2026-09-10T01:03:08.836Z Record version: sha256:da4dee068b9f109bb2d1b7a5d2874c7b3459a3ab4a99852223c97d3f8bbef8f7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. No modifications of the disclosure required by paragraph [715-20-50-1(h)](https://asc.understandingaccounting.org/asc/715/20/#715-20-50-1) are required in this case because the accounting required by this Topic does not change the amount of net periodic pension cost recognized under Subtopic 715-30. (See the table in paragraph [980-715-55-10](https://asc.understandingaccounting.org/asc/715/980/#715-980-55-10).) ##### [715-980-55-15](https://asc.understandingaccounting.org/asc/715/980/#715-980-55-15) Pending content: no Source downloaded (UTC): 2026-09-10T01:03:08.836Z to 2026-09-10T01:03:08.836Z Record version: sha256:222eaae5221a66e2d8925a7ae04c0a6a31a8a2c8a4790dcba2a3f64e54188820 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In 20X1, the amount allowable for rate-making purposes is less than net periodic pension cost determined under Subtopic 715-30 by $100. Of that amount, $80 was allowable for rate-making purposes in 20X0. Therefore, the 20X0 unearned revenue of $80 is recognized as revenue for 20X1. Paragraph [980-340-25-1](https://asc.understandingaccounting.org/asc/340/980/#340-980-25-1) requires the remaining portion of the $100 difference ($20) to be capitalized as an [incurred cost](https://asc.understandingaccounting.org/glossary/i/#incurred-cost "A cost arising from cash paid out or obligation to pay for an acquired asset or service, a loss from any cause that has been sustained and has been or must be paid for.") for which future recovery is assured by actions of the regulator. ##### [715-980-55-16](https://asc.understandingaccounting.org/asc/715/980/#715-980-55-16) Pending content: no Source downloaded (UTC): 2026-09-10T01:03:08.836Z to 2026-09-10T01:03:08.836Z Record version: sha256:e8e5c7c12746af8335e84673ca5a749113e27cfbe34c1eb2378d3b0a72aa4fd1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The journal entries to account for the accrual of net periodic pension cost and the contribution made to the pension plan during the year are as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-0AD66722-0661-47B7-9983-0E469DC89F3B-low.gif) Journal Entry 1 Net periodic pension cost $180 Capitalized cost for future recovery 20 Unearned revenue 80 Pension liability $200 Revenue 80 - To record net periodic pension cost for the period and the asset created by actions of the regulator - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-19CB1CD8-56CE-425F-B88B-5B3D927B3417-low.gif) Journal Entry 2 Pension liability $100 Cash $100 - To record contribution to pension plan ##### [715-980-55-17](https://asc.understandingaccounting.org/asc/715/980/#715-980-55-17) Pending content: no Source downloaded (UTC): 2026-09-10T01:03:08.836Z to 2026-09-10T01:03:08.836Z Record version: sha256:e2057cafb5151d65614e3cd97f3ef181e7c5aa5bbe5583e3eb5dd62928ecd884 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In this case, the accounting required by this Topic changes the amount of net periodic pension cost that otherwise would have been recognized under Subtopic 715-30 requiring modification of the disclosure required by paragraph [715-20-50-1(h)](https://asc.understandingaccounting.org/asc/715/20/#715-20-50-1). (See the table in paragraph [980-715-55-10](https://asc.understandingaccounting.org/asc/715/980/#715-980-55-10).) ##### [715-980-55-18](https://asc.understandingaccounting.org/asc/715/980/#715-980-55-18) Pending content: no Source downloaded (UTC): 2026-09-10T01:03:08.836Z to 2026-09-10T01:03:08.836Z Record version: sha256:696752f732070d1d2d4e621aef774ac605fe8e92d77d6c7f5e460eed95791ae2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In 20X2, the amount allowable for rate-making purposes is less than net periodic pension cost determined under Subtopic 715-30 by $30. None of that amount was allowable for rate-making purposes in prior years. Paragraph [980-340-25-1](https://asc.understandingaccounting.org/asc/340/980/#340-980-25-1) requires the $30 to be capitalized as an incurred cost for which future recovery is assured by actions of the regulator. ##### [715-980-55-19](https://asc.understandingaccounting.org/asc/715/980/#715-980-55-19) Pending content: no Source downloaded (UTC): 2026-09-10T01:03:08.836Z to 2026-09-10T01:03:08.836Z Record version: sha256:74bff1078a6cccb33d8395e2c4bfa381b31dd084986ca9b201a899058933473c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The journal entries to account for the accrual of net periodic pension cost and the contribution made to the pension plan during the year are as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-E25FB726-F308-4415-9133-91E9E84A8F7C-low.gif) Journal Entry 1 Net periodic pension cost $140 Capitalized cost for future recovery 30 Pension liability $170 - To record net periodic pension cost for the period and the asset created by actions of the regulator - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-6687FE66-88B8-4E29-97BA-494E92D28F3D-low.gif) Journal Entry 2 Pension liability $140 Cash $140 - To record contribution to pension plan ##### [715-980-55-20](https://asc.understandingaccounting.org/asc/715/980/#715-980-55-20) Pending content: no Source downloaded (UTC): 2026-09-10T01:03:08.836Z to 2026-09-10T01:03:08.836Z Record version: sha256:754260bd56c9de4293dfb26744aae02725d2cb8de5ea1a672ea9d4577d493113 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The situation in 20X2 is similar to that in 20X1, necessitating additional disclosure. (See the table in paragraph [980-715-55-10](https://asc.understandingaccounting.org/asc/715/980/#715-980-55-10).) ##### [715-980-55-21](https://asc.understandingaccounting.org/asc/715/980/#715-980-55-21) Pending content: no Source downloaded (UTC): 2026-09-10T01:03:08.836Z to 2026-09-10T01:03:08.836Z Record version: sha256:1d038e41807c9a09b9e3819bb47da0a896a1b1787cde2f828590f57f8d5affb5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In 20X3, the amount allowable for rate-making purposes exceeds net periodic pension cost determined under Subtopic 715-30 by $80. In prior years (20X1 and 20X2), $50 of that amount was recognized as a capitalized cost. ##### [715-980-55-22](https://asc.understandingaccounting.org/asc/715/980/#715-980-55-22) Pending content: no Source downloaded (UTC): 2026-09-10T01:03:08.836Z to 2026-09-10T01:03:08.836Z Record version: sha256:d1cc5fe973022d0cab1d2caf7171d7e48172b60c4583709859d5159b0ed96dcb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Accordingly, that capitalized cost ($50) is expensed in 20X3. Additionally, paragraph [980-405-25-1](https://asc.understandingaccounting.org/asc/405/980/#405-980-25-1) requires recognition of a liability (unearned revenue) equal to the remaining portion ($30) of the amount allowable for rate-making purposes in excess of net periodic pension cost determined under Subtopic 715-30 \[($200 - $120) - $50 = $30\]. When that pension cost is incurred for financial reporting purposes, the $30 liability (unearned revenue) shall be eliminated and revenue shall be recognized. ##### [715-980-55-23](https://asc.understandingaccounting.org/asc/715/980/#715-980-55-23) Pending content: no Source downloaded (UTC): 2026-09-10T01:03:08.836Z to 2026-09-10T01:03:08.836Z Record version: sha256:ed85aeca734a92205f74001a42c83496394d0802cdcd922846eaa7cc10542aa2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The journal entries to account for the accrual of net periodic pension cost and the contribution made to the pension plan during the year are as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-B37C13C8-1163-4AB5-8277-479353ED01EB-low.gif) Journal Entry 1 Net periodic pension cost $170 Revenue 30 Capitalized cost for future recovery $50 Pension liability 120 Unearned revenue 30 - To record net periodic pension cost for the period and the liability created by actions of the regulator - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-234D1171-8393-4D58-A736-05B150732DBF-low.gif) Journal Entry 2 Pension liability $200 Cash $200 - To record contribution to pension plan ##### [715-980-55-24](https://asc.understandingaccounting.org/asc/715/980/#715-980-55-24) Pending content: no Source downloaded (UTC): 2026-09-10T01:03:08.836Z to 2026-09-10T01:03:08.836Z Record version: sha256:b08d86de20911534c54dd10c87cb171188386031af4e7be3eea2f6c0f78c96b1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The situation in 20X3 is similar to that in 20X1 and 20X2, necessitating additional disclosure. (See the table in paragraph [980-715-55-10](https://asc.understandingaccounting.org/asc/715/980/#715-980-55-10).) ##### [715-980-55-25](https://asc.understandingaccounting.org/asc/715/980/#715-980-55-25) Pending content: no Source downloaded (UTC): 2026-09-10T01:03:08.836Z to 2026-09-10T01:03:08.836Z Record version: sha256:a8ae9ee158444030599bd06a20a0259847f7e39cb979c99d90459793988c1e06 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following illustrates the disclosure of the components of net periodic pension cost for 20X0-20X3. It is assumed that there is no transition asset or obligation remaining in accumulated other comprehensive income and there are no gains or losses for the four-year period. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-30044AC7-4F9C-4579-971F-AAADAF363CDB-low.gif) 20X0 20X1 20X2 20X3 Service cost (a) $ XXX $ XXX $ XXX $ XXX Interest cost (a) XXX XXX XXX XXX Actual return on plan assets (a) (XXX) (XXX) (XXX) (XXX) Net amortization and deferral - - - - Net periodic pension cost determined under Subtopic 715-20 120 200 170 120 Amount (capitalized) expensed due to actions of the regulator (20) (30) 50 Net periodic pension cost recognized $120 $180 $140 $170 (a) Amounts are excluded for illustrative purposes only.