# ASC 962-40: Plan Accounting—Defined Contribution Pension Plans — Terminating Plans Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/962/40/) 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): 2026-09-10T02:24:05.891Z to 2026-09-10T02:24:22.185Z Record version: sha256:48aee92c179668b9609e1a444f662e3a7d736f9755ef5d9983a92f80a38432e4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 962-40: Plan Accounting—Defined Contribution Pension Plans — Terminating Plans ### Machine-generated study aids ```json { "summary": "ASC 962-40 governs the accounting and reporting by defined contribution pension plans that are terminating. Its core rule is that once liquidation of the plan is deemed imminent under ASC 205-30, the plan must prepare its financial statements—including year-end statements for a plan year in which imminence arose before year end—on the liquidation basis of accounting. The plan must also disclose the relevant circumstances in all subsequent financial statements once a termination decision is made or a wasting trust exists.", "key_points": [ "This Subtopic applies to defined contribution plans that are terminating plans (962-40-05-1) and follows the scope of Subtopic 962-10 (962-40-15-1).", "If liquidation of the plan is deemed imminent, as defined in 205-30-25-2, before the end of the plan year, the year-end financial statements shall be prepared using the liquidation basis of accounting under Subtopic 205-30 (962-40-25-1).", "Plan financial statements for all periods ending after the determination that liquidation is imminent are prepared on the liquidation basis (962-40-25-2).", "When a decision to terminate the plan has been made, or when a wasting trust exists (participants no longer accrue benefits but the plan continues until accrued benefits are paid), the relevant circumstances shall be disclosed in all subsequent plan financial statements (962-40-50-1).", "Former subsequent-measurement guidance at 962-40-35-1 was superseded by ASU 2013-07, which relocated liquidation-basis measurement to Subtopic 205-30." ], "categories": [ "Compensation and benefits", "Presentation", "Disclosure", "Industry-specific" ], "audience_level": "intermediate", "student_note": "Exam questions turn on the trigger: it is not the decision to terminate but the point at which liquidation becomes \"imminent\" under 205-30-25-2 that forces the liquidation basis—and if that point falls before plan year end, the year-end statements themselves must use it. A common misunderstanding is assuming a wasting trust automatically requires liquidation-basis accounting; it only triggers the disclosure requirement in 962-40-50-1.", "related_topics": [ "205-30", "962-10", "960-40", "965-40", "962-325" ], "key_concepts": [ "terminating plan", "liquidation basis of accounting", "liquidation imminent", "wasting trust", "defined contribution pension plan", "plan financial statements", "termination disclosure" ] } ``` Source downloaded (UTC): 2026-09-10T02:24:05.891Z to 2026-09-10T02:24:05.891Z Record version: sha256:dc864dc2c8d2ba08123553f310a8584396aada2ba0fe6bd1f4563f7ed1a37c85 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 962-40-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/962/40/#00-status) SEC content: no ##### [962-40-00-1](https://asc.understandingaccounting.org/asc/962/40/#962-40-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:24:05.891Z to 2026-09-10T02:24:05.891Z Record version: sha256:687ca2397ee725aa5ea95ee97f095b46fa26b43a4c8683b7ffe337cfc406afcc 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
BenefitsAmendedAccounting Standards Update No. 2016-1912/14/2016
Benefits (3rd def.)AddedAccounting Standards Update No. 2014-0603/14/2014
Defined Contribution PlanAmendedAccounting Standards Update No. 2014-0603/14/2014
LiquidationAddedAccounting Standards Update No. 2013-0704/22/2013
962-40-25-1AmendedAccounting Standards Update No. 2013-0704/22/2013
962-40-25-2AmendedAccounting Standards Update No. 2013-0704/22/2013
962-40-35-1SupersededAccounting Standards Update No. 2013-0704/22/2013
962-40-35-1AmendedAccounting Standards Update No. 2012-0410/01/2012
962-40-50-1AmendedAccounting Standards Update No. 2014-0603/14/2014
Source downloaded (UTC): 2026-09-10T02:24:08.912Z to 2026-09-10T02:24:08.912Z Record version: sha256:a6470ee2a72a484f6399fe6928411a5741a0e979bf098ffd26142a1f6a1c778e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 962-40-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/962/40/#05-overview-and-background) SEC content: no ##### [962-40-05-1](https://asc.understandingaccounting.org/asc/962/40/#962-40-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:24:08.912Z to 2026-09-10T02:24:08.912Z Record version: sha256:030be0c0e16794ed84ec8f1456cd2c7a58ada0ac2da63b25ce68576554763ff6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance for [defined contribution plans](https://asc.understandingaccounting.org/glossary/d/#defined-contribution-plan "A plan that provides an individual account for each participant and provides benefits that are based on all of the following: amounts contributed to the participant's account by the employer or employee; investment experience; and any forfeitures allocated to the account, less any administrative expenses charged to the plan. Defined contribution health and welfare plans—Defined contribution health and welfare plans maintain an individual account for each plan participant. They have terms that specify the means of determining the contributions to participants' accounts, rather than the amount of benefits the participants are to receive. The benefits a plan participant will receive are limited to the amount contributed to the participant's account, investment experience, expenses, and any forfeitures allocated to the participant's account. These plans also include flexible spending arrangements. Defined contribution postretirement plan—A plan that provides postretirement benefits in return for services rendered, provides an individual account for each plan participant, and specifies how contributions to the individual's account are to be determined rather than specifies the amount of benefits the individual is to receive. Under a defined contribution postretirement plan, the benefits a plan participant will receive depend solely on the amount contributed to the plan participant's account, the returns earned on investments of those contributions, and the forfeitures of other plan participants' benefits that may be allocated to that plan participant's account.") 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): 2026-09-10T02:24:11.898Z to 2026-09-10T02:24:11.898Z Record version: sha256:6590df25acddea371459ab4065e4ffdcdfbbbbe39e26ff64fc3c376fe6bd7c57 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 962-40-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/962/40/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [962-40-15-1](https://asc.understandingaccounting.org/asc/962/40/#962-40-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:24:11.898Z to 2026-09-10T02:24:11.898Z Record version: sha256:9e9295ad04e273f549f9977845120533a90cf1cd6c3994d1071f0a73e992bb29 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 962-10-15). Source downloaded (UTC): 2026-09-10T02:24:16.921Z to 2026-09-10T02:24:16.921Z Record version: sha256:2dace4f75fd2d9656308edb11cb9a29ebea0605ed156ddd5dc3a0e4174c18028 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 962-40-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/962/40/#25-recognition) SEC content: no ##### [962-40-25-1](https://asc.understandingaccounting.org/asc/962/40/#962-40-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:24:16.921Z to 2026-09-10T02:24:16.921Z Record version: sha256:cbe038aadf80639fb7c586f959f70d26f09fd7f92b4a711f35021ec4c69ef793 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the [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. ##### [962-40-25-2](https://asc.understandingaccounting.org/asc/962/40/#962-40-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:24:16.921Z to 2026-09-10T02:24:16.921Z Record version: sha256:f64175242158ca4a1ea35008aba246d59c9679891f4b03d574cf8f0b196a3eef 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): 2026-09-10T02:24:19.666Z to 2026-09-10T02:24:19.666Z Record version: sha256:30ef3c68db8318e1cfce236c5a673bb7f3b00a63fa8fbcc41092ac7705eeaa54 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 962-40-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/962/40/#35-subsequent-measurement) SEC content: no ##### [962-40-35-1](https://asc.understandingaccounting.org/asc/962/40/#962-40-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:24:19.666Z to 2026-09-10T02:24:19.666Z Record version: sha256:ab1d0f38fe4c9eb531532013240b6a8d743d7292431a3486ab0e6e0d81aadf7e 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/). Source downloaded (UTC): 2026-09-10T02:24:22.185Z to 2026-09-10T02:24:22.185Z Record version: sha256:bc76ae0847ac343b62d17d09115388385d8b33f2aea64389c2c36ffe6043b179 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 962-40-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/962/40/#50-disclosure) SEC content: no ##### [962-40-50-1](https://asc.understandingaccounting.org/asc/962/40/#962-40-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:24:22.185Z to 2026-09-10T02:24:22.185Z Record version: sha256:649a86b3520cc25a00a4dc2c874e724f3f1dd2f826f377197532bd42ccf72d02 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](https://asc.understandingaccounting.org/glossary/b/#benefits "The monetary or in-kind benefits or benefit coverage to which participants may be entitled under a pension plan or a health and welfare plan (which can include active, terminated, and retired employees or their dependents or beneficiaries). Examples of benefits may include, but are not limited to, health care benefits, life insurance, legal, educational, and advisory services, pension benefits, disability benefits, death benefits, and benefits due to termination of employment.") 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.