AccountingLink

    Compensation matters

    10 March 2017

    To the Point - Employers’ presentation of defined benefit retirement plan costs will change
    The FASB issued new guidance that will change how employers that sponsor defined benefit pension and/or other postretirement benefit plans present the net periodic benefit cost in the income statement. Employers will present the service cost component of net periodic benefit cost in the same income statement line item(s) as other employee compensation costs arising from services rendered during the period. Only the service cost component will be eligible for capitalization in assets. Employers will present the other components of the net periodic benefit cost separately from the line item(s) that includes the service cost and outside of any subtotal of operating income, if one is presented. The standard is effective for public business entities for annual periods beginning after 15 December 2017, and interim periods therein. Early adoption is permitted as of the beginning of an annual period for which financial statements (interim or annual) have not been issued or made available for issuance.

    28 February 2017

    To the Point - FASB amends employee benefit plan master trust reporting
    The FASB issued final guidance, based on an Emerging Issues Task Force consensus, that will change the reporting requirements for an employee benefit plan that holds an interest in a master trust. The guidance also eliminates a disclosure requirement related to 401(h) retiree health accounts.

    6 January 2017

    Comment Letter - FASB proposal on the scope of modification accounting in the stock compensation guidance
    In our comment letter, we support the Board’s objective to reduce the cost and complexity of applying modification accounting and believe many of the proposed amendments would meet that objective. However, we believe the FASB should include additional guidance about how the amendments would be operationalized.

    3 November 2016

    Financial Reporting Developments - Share-based payment
    We have updated our Financial reporting developments publication on share-based payment to reflect the new guidance in ASU 2016-09 and to clarify and enhance our interpretative guidance. Refer to Appendix F of the publication for a summary of the updates.

    11 May 2016

    Technical Line - A closer look at the new guidance on accounting for share-based payments to employees
    Our publication takes a closer look at how entities will be affected by ASU 2016-09, Improvements to Employee Share-Based Payment Accounting. Entities will have to recognize the income tax effects of awards in the income statement when the awards vest or are settled (i.e., the recordkeeping of APIC pools will no longer be necessary). The guidance on employers’ accounting for an employee’s use of shares to satisfy the employer’s statutory income tax withholding obligation and for forfeitures is changing, and two practical expedients for nonpublic entities have been added.

    28 April 2016

    To the Point - FASB makes targeted amendments to the accounting for employee share-based payments
    The FASB issued final guidance that will change how companies account for certain aspects of share-based payments to employees. Entities will be required to recognize the income tax effects of awards in the income statement when the awards vest or are settled (i.e., APIC pools will be eliminated). The guidance on employers’ accounting for an employee’s use of shares to satisfy the employer’s statutory income tax withholding obligation and for forfeitures is changing, and two practical expedients for nonpublic entities have been added. We have updated our publication to reflect the FASB staff’s recent response to a technical inquiry about one aspect of the new guidance. The staff said a change in the net-share settlement terms of a share-based payment plan or outstanding award to allow the withholding of shares up to the maximum statutory tax rate would not be accounted for as a modification.

    25 April 2016

    Comment letter - FASB proposal on changes to disclosure requirements for defined benefit plans
    In our comment letter, we support the proposed elimination of certain disclosure requirements but have concerns about how entities would apply the materiality assessments under the FASB’s proposed ASU on materiality. We also are concerned that certain proposed disclosure requirements, together with current ones required by ASC 715, Compensation – Retirement Benefits, could further reduce disclosure effectiveness.

    25 April 2016

    Comment letter - FASB proposal on changes to the reporting of net periodic pension cost and net periodic postretirement benefit cost
    In our comment letter, we said we agree that only the service cost component of net periodic pension cost and net periodic postretirement benefit cost should be eligible for capitalization in assets. We also believe that the prior service cost or credit component should be presented in the same financial statement line item as the current service cost component within operating income. However, we have concerns about the proposed amendment that would require entities to present the other components of net periodic pension cost and net periodic postretirement benefit cost outside a measure of operations.

    28 January 2016

    To the Point - Employers’ presentation and disclosures for defined benefit retirement plans may change
    The FASB issued two proposals that would change certain presentation and disclosure requirements for employers that sponsor defined benefit pension and/or other postretirement benefit plans. The first proposal would require an employer to report the service cost component of net periodic benefit cost separately from the other components in the income statement and would require that only the service cost component be eligible for capitalization in assets. The second proposal would require new disclosures and eliminate certain disclosures. Comments on both proposals are due by 25 April 2016.

    15 October 2015

    To the Point - Updated mortality improvement scale should be considered in sponsors’ financial statements
    The Society of Actuaries issued an updated mortality improvement scale that could affect a sponsor’s benefit obligations and contributions. The updated mortality improvement scale reflects two additional years of Social Security mortality data that have been recently released and were not included in the MP-2014 scale. Sponsors that have not yet issued financial statements for any fiscal year need to evaluate whether the updated scale provides additional evidence about conditions that existed at the balance sheet date.

    30 September 2015

    To the Point - Potential alternative to develop discount rates used to measure defined benefit plan costs
    The SEC staff said recently that when a yield curve is used to determine discount rates, it would not object to a company changing from using a weighted average discount rate to the spot rate approach for measuring the interest and service cost components of net periodic benefit cost for defined-benefit pension plans and other defined-benefit post-retirement plans. The SEC staff also said the effects would be accounted for prospectively as either a change in estimate or a change in estimate that is inseparable from a change in accounting principle. Companies that do not use a yield curve approach for determining discount rates (e.g., use a bond matching approach) should discuss any changes in approach with their auditors and the SEC staff before making a change.