ASC 965-20
Net Assets Available for Plan Benefits
965 Plan Accounting—Health and Welfare Benefit Plans
Source downloaded: .Record version 640d1ec97b3f. Effective date must be checked in the source.
ASC 965-20 governs the "net assets available for benefits" component of health and welfare benefit plan financial statements. It requires the plan to accrue non-benefit liabilities (e.g., securities purchased, income taxes payable, third-party administrator fees), record noncash contributions at fair value less costs to sell if significant, and present a statement of net assets available for benefits showing total assets, total liabilities, and net assets available for benefits. The companion statement of changes must show, in sufficient detail, the significant changes for the year, including contributions by source, net appreciation/depreciation in fair value, investment income, claims payments, premiums, and administrative expenses.
Key points (7)
- Liabilities other than benefit obligations—amounts owed for securities purchased, income taxes payable by the plan, and other expenses such as third-party administrator fees—shall be deducted to arrive at net assets available for benefits (965-20-25-1).
- A noncash contribution shall be recorded at fair value less costs to sell, if significant, at the date of the contribution (965-20-30-1), and its nature shall be described parenthetically or in a note (965-20-50-1).
- The statement of net assets available for benefits must present total assets, total liabilities, and net assets available for benefits (965-20-45-1); former subparagraph (c) was superseded by ASU 2015-12 (Part I).
- The statement of changes in net assets available for benefits must show significant changes, including employer contributions segregated between cash and noncash, participant contributions (including those collected and remitted by the sponsor), contributions from other sources, net appreciation/depreciation in fair value, investment income, income taxes, claims payments, insurance premiums, operating and administrative expenses, and other significant changes such as interplan transfers (965-20-45-3).
- Net appreciation or depreciation includes realized gains and losses on investments both purchased and sold during the period plus unrealized appreciation or depreciation on investments held at year-end (965-20-45-3(e)).
- Payments of claims and premiums relating to insurance contracts that are excluded from plan assets are not reported as changes in net assets (965-20-45-3(h)-(i)).
- The statement of changes shall reflect income credited to participants and net appreciation or depreciation in fair value of only those investment contracts that are not deemed to be fully benefit-responsive (965-20-45-5).
For students. Plan financial statements are unusual: the "balance sheet" is a statement of net assets available for benefits, and benefit obligations are reported separately (ASC 965-30/965-40), not as liabilities here. A common mistake is netting or omitting non-benefit liabilities, or treating claims paid by an insurer under contracts excluded from plan assets as plan activity.
Machine-generated study aid for ASC 965-20. Check the source paragraphs below.
965-20-00Status
Source downloaded: .Record version 54ac6e77a464. Effective date must be checked in the source.
965-20-05Overview and Background
Source downloaded: .Record version 680fe7a10eef. Effective date must be checked in the source.
965-20-15Scope and Scope Exceptions
Source downloaded: .Record version 9f31a8b579b1. Effective date must be checked in the source.
Overall Guidance
965-20-25Recognition
Source downloaded: .Record version 2fca5a33a2e5. Effective date must be checked in the source.
965-20-30Initial Measurement
Source downloaded: .Record version 7b6aead23599. Effective date must be checked in the source.
Noncash Contribution
965-20-45Other Presentation Matters
Source downloaded: .Record version 4f7c13ff60e4. Effective date must be checked in the source.
Statement of Net Assets Available for Benefits
- aTotal assets
- bTotal liabilities
- c
- dNet assets available for benefits.
Statement of Changes in Net Assets Available for Benefits
- aContributions from employers, segregated between cash and noncash contributions
- bThe nature of noncash contributions described either parenthetically or in a note
- cContributions from participants, including those collected and remitted by the sponsor
- dContributions from other identified sources (for example, state subsidies or federal grants)
- eThe net appreciation or depreciation in fair value. Net appreciation or depreciation includes realized gains and losses on investments that were both purchased and sold during the period as well as unrealized appreciation or depreciation of the investments held at year-end.
- fInvestment income, excluding the net appreciation or depreciation
- gIncome taxes paid or payable, if applicable
- hPayments of claims, excluding payments made by an insurance entity pursuant to contracts that are excluded from plan assets
- iPayments of premiums to insurance entities to purchase contracts that are excluded from plan assets
- jOperating and administrative expenses
- kOther changes (such as transfers of assets to or from other plans), if significant.
965-20-50Disclosure
Source downloaded: .Record version 3f0ce4ac8c7b. Effective date must be checked in the source.
Related subtopics
- 960-30 Net Assets Available for Plan BenefitsPlan Accounting—Defined Benefit Pension Plans
- 325-960 Plan Accounting—Defined Benefit Pension PlansInvestments—Other
- 325-965 Plan Accounting—Health and Welfare Benefit PlansInvestments—Other
- 965-10 OverallPlan Accounting—Health and Welfare Benefit Plans
- 965-30 Plan Benefit ObligationsPlan Accounting—Health and Welfare Benefit Plans
- 715-70 Defined Contribution PlansCompensation—Retirement Benefits