# ASC 965-40: Plan Accounting—Health and Welfare Benefit Plans — Terminating Plans Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/965/40/) 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): 2026-09-10T02:25:30.319Z to 2026-09-10T02:25:49.530Z Record version: sha256:68899b1327ca918f658930641806741f9b5047b88de083b778aa069fbb51c5b3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 965-40: Plan Accounting—Health and Welfare Benefit Plans — Terminating Plans ### Machine-generated study aids ```json { "summary": "ASC 965-40 governs accounting and reporting by health and welfare benefit plans that are terminating. Once liquidation of the plan is deemed imminent under paragraph 205-30-25-2, the plan must prepare its financial statements using the liquidation basis of accounting under Subtopic 205-30, including for the year-end statements if imminence is determined before the plan year ends. Benefit obligations are measured on the liquidation basis rather than as actuarial present values, and the termination or wasting-trust circumstances must be disclosed in all subsequent plan financial statements.", "key_points": [ "The scope follows the Overall Subtopic scope for health and welfare benefit plans (965-40-15-1), and covers only terminating plans (965-40-05-1).", "If liquidation is deemed imminent (as defined in 205-30-25-2) before the end of the plan year, the plan's year-end financial statements must be prepared using the liquidation basis of accounting under Subtopic 205-30 (965-40-25-1).", "All plan financial statements for periods ending after the determination that liquidation is imminent use the liquidation basis of accounting (965-40-25-2).", "Benefit obligations of a terminating plan are determined on the liquidation basis, and their carrying value may differ from the actuarial present value of benefit obligations reported by an ongoing plan (965-40-35-2).", "Upon determining that liquidation is imminent, the plan must consider whether any or all benefits become vested (965-40-35-2).", "When a decision to terminate has been made, or when a wasting trust exists (participants no longer accrue benefits but the plan remains to pay accrued benefits), the relevant circumstances must be disclosed in all subsequent financial statements issued by the plan (965-40-50-1)." ], "categories": [ "Subsequent measurement", "Disclosure", "Compensation and benefits", "Industry-specific" ], "audience_level": "intermediate", "student_note": "The trigger is \"liquidation is imminent\" as defined in 205-30-25-2, not the mere adoption of a termination resolution or the plan's legal dissolution date; once that trigger is met the plan switches wholesale to the liquidation basis, even for a year-end that has not yet arrived. A common mistake is continuing to report benefit obligations at actuarial present value, or assuming a wasting trust needs no disclosure because it is not yet liquidating.", "related_topics": [ "205-30", "965-10", "960-40", "962-40", "965-30" ], "key_concepts": [ "terminating plan", "liquidation basis of accounting", "liquidation imminent", "benefit obligations", "wasting trust", "vesting of benefits", "health and welfare benefit plan" ] } ``` Source downloaded (UTC): 2026-09-10T02:25:30.319Z to 2026-09-10T02:25:30.319Z Record version: sha256:ae4708402c280ea8b0a93b5d2813ca424edd51639ee6344651364a4d798b484f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 965-40-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/965/40/#00-status) SEC content: no ##### [965-40-00-1](https://asc.understandingaccounting.org/asc/965/40/#965-40-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:25:30.319Z to 2026-09-10T02:25:30.319Z Record version: sha256:c196f74f9d79285d5c65e868993d5d9a95caedee103f31dba1e2efc1837558c2 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
LiquidationAddedAccounting Standards Update No. 2013-0704/22/2013
Terminating Plan (1st def.)AddedAccounting Standards Update No. 2014-0603/14/2014
Terminating Plan (2nd def.)SupersededAccounting Standards Update No. 2014-0603/14/2014
965-40-05-1AmendedAccounting Standards Update No. 2014-0603/14/2014
965-40-25-1AmendedAccounting Standards Update No. 2013-0704/22/2013
965-40-25-2AmendedAccounting Standards Update No. 2013-0704/22/2013
965-40-35-1AmendedAccounting Standards Update No. 2014-0603/14/2014
965-40-35-1SupersededAccounting Standards Update No. 2013-0704/22/2013
965-40-35-1AmendedAccounting Standards Update No. 2012-0410/01/2012
965-40-35-2AmendedAccounting Standards Update No. 2014-0603/14/2014
965-40-35-2AmendedAccounting Standards Update No. 2013-0704/22/2013
965-40-50-1AmendedAccounting Standards Update No. 2014-0603/14/2014
Source downloaded (UTC): 2026-09-10T02:25:34.007Z to 2026-09-10T02:25:34.007Z Record version: sha256:ce0c597618d902a794469d0d324c2fd3ecdb4a01844dbeeb5da037a40a17e2ce Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 965-40-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/965/40/#05-overview-and-background) SEC content: no ##### [965-40-05-1](https://asc.understandingaccounting.org/asc/965/40/#965-40-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:25:34.007Z to 2026-09-10T02:25:34.007Z Record version: sha256:aaff5dbbaa9b737c00506a3cd89efb070a4eeed9bdcc808c57a1795259bec49b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance for [health and welfare benefit plans](https://asc.understandingaccounting.org/glossary/h/#health-and-welfare-benefit-plans "Health and welfare benefit plans include plans that provide the following: Any of the following benefits: Medical, dental, visual, psychiatric, or long-term health care Life insurance (offered separately from a pension plan) Certain severance benefits Accidental death or dismemberment benefits. Benefits for unemployment, disability, vacations, or holidays Other benefits such as apprenticeships, tuition assistance, day care, dependent care, housing subsidies, or legal services.") 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): 2026-09-10T02:25:36.287Z to 2026-09-10T02:25:36.287Z Record version: sha256:0df116d9561305d1ed32ea2f8b719ca18fdc4ea674b963f6cfccbbf04de0061c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 965-40-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/965/40/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [965-40-15-1](https://asc.understandingaccounting.org/asc/965/40/#965-40-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:25:36.287Z to 2026-09-10T02:25:36.287Z Record version: sha256:f44da2e3049cb1f82d7add5b7a76b7b1a04d3e9373d77077906ba0a9ea7e9d66 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 965-10-15. Source downloaded (UTC): 2026-09-10T02:25:42.326Z to 2026-09-10T02:25:42.326Z Record version: sha256:19cbf8515c367ab478aec682ec8897de6d221654ee3254474b9aa16a19fa1722 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 965-40-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/965/40/#25-recognition) SEC content: no ##### [965-40-25-1](https://asc.understandingaccounting.org/asc/965/40/#965-40-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:25:42.326Z to 2026-09-10T02:25:42.326Z Record version: sha256:ceb7b1841a4bad7f19d51688d6a8224942b08b21cf2a7340c04a46124f5a84e2 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. ##### [965-40-25-2](https://asc.understandingaccounting.org/asc/965/40/#965-40-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:25:42.326Z to 2026-09-10T02:25:42.326Z Record version: sha256:3915ccdbf614809e843a8863037c1fc8d1826eafdccad038f3f74aa8c7767bdf 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): 2026-09-10T02:25:45.653Z to 2026-09-10T02:25:45.653Z Record version: sha256:d835f19fb5bf400a7335614d75037190ca87628407332d9075c1cac71979f1de Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 965-40-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/965/40/#30-initial-measurement) SEC content: no ##### [965-40-30-1](https://asc.understandingaccounting.org/asc/965/40/#965-40-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:25:45.653Z to 2026-09-10T02:25:45.653Z Record version: sha256:b3fdcf86d9b8244ddbc3288590c0cb3e5bb22d24064155fe44966a221087fe7c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. \[Section not used\] Source downloaded (UTC): 2026-09-10T02:25:47.719Z to 2026-09-10T02:25:47.719Z Record version: sha256:bb8eae646755d8fbf07babdfae911785265bf12c477aa00b1b6855a0e8098bf4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 965-40-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/965/40/#35-subsequent-measurement) SEC content: no ##### [965-40-35-1](https://asc.understandingaccounting.org/asc/965/40/#965-40-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:25:47.719Z to 2026-09-10T02:25:47.719Z Record version: sha256:eebe51639b000584663236ed56808e9c657acd0f9cddbfbcccdcbb6a4ce03764 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/). ##### [965-40-35-2](https://asc.understandingaccounting.org/asc/965/40/#965-40-35-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:25:47.719Z to 2026-09-10T02:25:47.719Z Record version: sha256:c82a2a88c9eb0ba625acfaf1a4af01553acad2b96daa4a4a9e936e3a9170cc78 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For [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."), benefit obligations shall be determined using the liquidation basis of accounting (see Subtopic 205-30), and their carrying value may differ from the actuarial present value of benefit obligations reported for an ongoing plan. Consideration shall be given upon the determination that liquidation is imminent to whether any or all [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.") become vested. Source downloaded (UTC): 2026-09-10T02:25:49.530Z to 2026-09-10T02:25:49.530Z Record version: sha256:9e12b98eba5241f5d041b34c11482579dd98810b28a7f3c76401b3060c8dc0bc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 965-40-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/965/40/#50-disclosure) SEC content: no ##### [965-40-50-1](https://asc.understandingaccounting.org/asc/965/40/#965-40-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:25:49.530Z to 2026-09-10T02:25:49.530Z Record version: sha256:0936266430da3886baa08682fd27889239614343eb4a612f9345ce04a0f581b1 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.