# ASC 960-40: Plan Accounting—Defined Benefit Pension Plans — Terminating Plans Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/960/40/) 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): 2026-09-10T02:23:28.176Z to 2026-09-10T02:23:46.986Z Record version: sha256:b2ac51fd578b37d7572e0eb40e0bcf4f8b46940166f3a9cab3f42d08901edbc6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 960-40: Plan Accounting—Defined Benefit Pension Plans — Terminating Plans ### Machine-generated study aids ```json { "summary": "ASC 960-40 covers defined benefit pension plans that are terminating. Once liquidation of the plan is deemed imminent (as defined in 205-30-25-2), the plan's financial statements for periods ending after that determination — including the year-end statements even if the trigger occurred mid-year — must be prepared on the liquidation basis of accounting under Subtopic 205-30. Accumulated plan benefits are measured on that liquidation basis, with all benefits generally reported as vested, and the terminating-plan or wasting-trust circumstances must be disclosed in all subsequent plan financial statements.", "key_points": [ "If liquidation of the plan is deemed imminent (per 205-30-25-2) before the end of the plan year, the plan's year-end financial statements must use the liquidation basis of accounting under Subtopic 205-30 (960-40-25-1).", "All plan financial statements for periods ending after the determination that liquidation is imminent are prepared on the liquidation basis (960-40-25-2).", "For terminating plan assets, accumulated plan benefits are determined using the liquidation basis, and the amount may differ from the actuarial present value of accumulated plan benefits reported for an ongoing plan (960-40-35-2).", "Upon termination, in general all benefits should be reported as vested (960-40-35-2).", "Once a decision to terminate is made, or when a wasting trust exists (participants no longer accrue benefits but the plan continues until accrued benefits are paid), the relevant circumstances must be disclosed in all subsequent plan financial statements (960-40-50-1).", "The scope follows the Overall Subtopic scope in Section 960-10-15 (960-40-15-1)." ], "categories": [ "Subsequent measurement", "Disclosure", "Compensation and benefits", "Industry-specific" ], "audience_level": "intermediate", "student_note": "Know the trigger: it is not the formal termination date but the point at which liquidation becomes \"imminent\" under 205-30-25-2 — and that trigger flips the whole year-end statement to the liquidation basis, not just the post-trigger stub period. A common mistake is continuing to split accumulated plan benefits between vested and nonvested; on termination essentially all benefits are reported as vested.", "related_topics": [ "205-30", "960-10", "960-20", "960-30", "962", "965" ], "key_concepts": [ "terminating plan", "liquidation basis of accounting", "liquidation imminent", "accumulated plan benefits", "vested benefits", "wasting trust", "defined benefit pension plan" ] } ``` Source downloaded (UTC): 2026-09-10T02:23:28.176Z to 2026-09-10T02:23:28.176Z Record version: sha256:54622da21b8615f9a94c76d0d374c35597e9a10fb93226fd71d2f35bdb24a6b1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 960-40-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/960/40/#00-status) SEC content: no ##### [960-40-00-1](https://asc.understandingaccounting.org/asc/960/40/#960-40-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:23:28.176Z to 2026-09-10T02:23:28.176Z Record version: sha256:feb63f0905622687c5ec962edaae437533ccebdeb0d82813d655f56702fba418 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
Defined Benefit Pension Plan (1st def.)SupersededAccounting Standards Update No. 2014-0603/14/2014
LiquidationAddedAccounting Standards Update No. 2013-0704/22/2013
960-40-05-1AmendedAccounting Standards Update No. 2014-0603/14/2014
960-40-25-1AmendedAccounting Standards Update No. 2013-0704/22/2013
960-40-25-2AmendedAccounting Standards Update No. 2013-0704/22/2013
960-40-35-1SupersededAccounting Standards Update No. 2013-0704/22/2013
960-40-35-1AmendedAccounting Standards Update No. 2012-0410/01/2012
960-40-35-2AmendedAccounting Standards Update No. 2013-0704/22/2013
Source downloaded (UTC): 2026-09-10T02:23:31.929Z to 2026-09-10T02:23:31.929Z Record version: sha256:d7fb88739ced9d48a2236f6c9bca7763495c14ee1e3e1869d7e7f27caeccb1cb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 960-40-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/960/40/#05-overview-and-background) SEC content: no ##### [960-40-05-1](https://asc.understandingaccounting.org/asc/960/40/#960-40-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:23:31.929Z to 2026-09-10T02:23:31.929Z Record version: sha256:ac49637beeebf955424ce78662ac376fb327029e537428d88e4c931c72c3f722 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance for [defined benefit pension plans](https://asc.understandingaccounting.org/glossary/d/#defined-benefit-plan "A defined benefit plan provides participants with a determinable benefit based on a formula provided for in the plan. Defined benefit health and welfare plans—Defined benefit health and welfare plans specify a determinable benefit, which may be in the form of a reimbursement to the covered plan participant or a direct payment to providers or third-party insurers for the cost of specified services. Such plans may also include benefits that are payable as a lump sum, such as death benefits. The level of benefits may be defined or limited based on factors such as age, years of service, and salary. Contributions may be determined by the plan's actuary or be based on premiums, actual claims paid, hours worked, or other factors determined by the plan sponsor. Even when a plan is funded pursuant to agreements that specify a fixed rate of employer contributions (for example, a collectively bargained multiemployer plan), such a plan may nevertheless be a defined benefit health and welfare plan if its substance is to provide a defined benefit. Defined benefit pension plan—A pension plan that defines an amount of pension benefit to be provided, usually as a function of one or more factors such as age, years of service, or compensation. Any pension plan that is not a defined contribution pension plan is, for purposes of Subtopic 715-30, a defined benefit pension plan. Defined benefit postretirement plan—A plan that defines postretirement benefits in terms of monetary amounts (for example, $100,000 of life insurance) or benefit coverage to be provided (for example, up to $200 per day for hospitalization, or 80 percent of the cost of specified surgical procedures). Any postretirement benefit plan that is not a defined contribution postretirement plan is, for purposes of Subtopic 715-60, a defined benefit postretirement plan. (Specified monetary amounts and benefit coverage are collectively referred to as benefits.)") that are [terminating plans](https://asc.understandingaccounting.org/glossary/t/#terminating-plan "All plans about which a termination decision has been made regardless of whether the terminating plan will be replaced."). Source downloaded (UTC): 2026-09-10T02:23:34.327Z to 2026-09-10T02:23:34.327Z Record version: sha256:2fbccaad7347384ba953eb830fd6be9859b465d8371cabd1454addab06de0a39 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 960-40-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/960/40/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [960-40-15-1](https://asc.understandingaccounting.org/asc/960/40/#960-40-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:23:34.327Z to 2026-09-10T02:23:34.327Z Record version: sha256:c149dbe2661fce341a8c1c05924e9169badf671b9dcb96b10e3e4aa72075f037 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 960-10-15). Source downloaded (UTC): 2026-09-10T02:23:39.040Z to 2026-09-10T02:23:39.040Z Record version: sha256:2a1b959b388ea903796c481021e4558f3a865e26a0a2e39dda1e85fbb7e04cb8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 960-40-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/960/40/#25-recognition) SEC content: no ##### [960-40-25-1](https://asc.understandingaccounting.org/asc/960/40/#960-40-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:23:39.040Z to 2026-09-10T02:23:39.040Z Record version: sha256:6e4eca025f98ed6f81cbab48a7b948fc2585e1be53e34af7763a768f0837fdde Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If [liquidation](https://asc.understandingaccounting.org/glossary/l/#liquidation "The process by which an entity converts its assets to cash or other assets and settles its obligations with creditors in anticipation of the entity ceasing all activities. Upon cessation of the entity's activities, any remaining cash or other assets are distributed to the entity's investors or other claimants (albeit sometimes indirectly). Liquidation may be compulsory or voluntary. Dissolution of an entity as a result of that entity being acquired by another entity or merged into another entity in its entirety and with the expectation of continuing its business does not qualify as liquidation.") of a plan is deemed to be imminent (as defined in paragraph [205-30-25-2](https://asc.understandingaccounting.org/asc/205/30/#205-30-25-2)) before the end of the plan year, the plan's year-end financial statements shall be prepared using the liquidation basis of accounting in accordance with Subtopic 205-30. ##### [960-40-25-2](https://asc.understandingaccounting.org/asc/960/40/#960-40-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:23:39.040Z to 2026-09-10T02:23:39.040Z Record version: sha256:03643c3c6774641e0770d20c1e46de459cc1b64035851e684fc6900f250fc539 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Plan financial statements for periods ending after the determination that liquidation is imminent are prepared using the liquidation basis of accounting. Source downloaded (UTC): 2026-09-10T02:23:42.813Z to 2026-09-10T02:23:42.813Z Record version: sha256:d88d9fb8f2f59db666f39352cd2dd5bf4e1c9214d671286d8f4c4538bb6db929 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 960-40-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/960/40/#35-subsequent-measurement) SEC content: no ##### [960-40-35-1](https://asc.understandingaccounting.org/asc/960/40/#960-40-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:23:42.813Z to 2026-09-10T02:23:42.813Z Record version: sha256:9bba8710df48d2bab48d330dfe1a697d2a3ee6db0962f7ed7740826eb24c7aef Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2013-07](https://asc.understandingaccounting.org/updates/asu-2013-07/). ##### [960-40-35-2](https://asc.understandingaccounting.org/asc/960/40/#960-40-35-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:23:42.813Z to 2026-09-10T02:23:42.813Z Record version: sha256:413e76b1daf6a2a1d96bdfcd46a5b784a8922dea154ed5c5b393bba81070604c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For [terminating plan](https://asc.understandingaccounting.org/glossary/t/#terminating-plan "All plans about which a termination decision has been made regardless of whether the terminating plan will be replaced.") assets, accumulated plan benefits shall be determined using the liquidation basis of accounting (see Subtopic 205-30), and their value may differ from the actuarial present value of accumulated plan benefits reported for an ongoing plan. In general, upon termination all benefits should be reported as vested. Source downloaded (UTC): 2026-09-10T02:23:46.986Z to 2026-09-10T02:23:46.986Z Record version: sha256:5410f075fc587154ad90ff7fa1d257460ce858fb41f14baacd657f9f34ff42e9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 960-40-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/960/40/#50-disclosure) SEC content: no ##### [960-40-50-1](https://asc.understandingaccounting.org/asc/960/40/#960-40-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:23:46.986Z to 2026-09-10T02:23:46.986Z Record version: sha256:07996189b8342d1315a048be84916284218227c58decdd7599cbe5532fa90f70 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When the decision has been made to terminate a plan or when a wasting trust (that is, a plan under which participants no longer accrue benefits but that will remain in existence as long as necessary to pay already accrued benefits) exists, the relevant circumstances shall be disclosed in all subsequent financial statements issued by the plan.