FASB Proposals Address Financial Reporting Improvements for Pension and Other Postretirement Benefit Plans
Feb 01, 2016
From the Financial Reporting Network
The FASB recently proposed two ASUs that address reporting of pensions and other postretirement benefits to employees:
Changes to the Disclosure Requirements for Defined Benefit Plans was issued as part of the FASB’s broader disclosure framework project with the objective of improving the effectiveness of financial statement disclosures by focusing on information most relevant to users. Specifically, the proposal would add new disclosure requirements to FASB ASC Subtopic 715-20, Compensation—Retirement
Benefits–Defined Benefit Plans—General, including descriptions of plan assets, and reasons for significant gains and losses that affect benefit obligations or plan assets. The proposals also would eliminate from ASC Subtopic 715-20 certain disclosure requirements that do not align with the guidance in the FASB’s proposed disclosure framework. The proposal would be applied retrospectively, except for the qualitative disclosures about plan assets measured at net asset value, which would be required beginning with the most recent period presented in the initial period of adoption.
Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost would require an employer to break out the service cost component from the other components of net periodic benefit cost. The proposal also would provide explicit guidance about how to present the service cost component and other components of net periodic benefit cost in the income statement, and would allow only the service cost component of net periodic benefit cost to be eligible for capitalization. The proposal about the presentation of the service cost component and other components of net periodic benefit cost in the income statement would be applied retrospectively. The proposal about the capitalization of the service cost component of net periodic benefit cost would be applied prospectively, on and after the effective date.
The FASB will determine the effective dates and whether to permit early adoption after considering stakeholder feedback. The comment period for each proposal ends April 25.
After clicking on the links above, log on to ARO.