Two FASB proposals would affect financial reporting issues related to retirement benefits.
One of the Proposed Accounting Standards Updates addresses a concern that the presentation of defined benefit cost on a net basis combines elements with different predictive values. It is titled Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.
Under the proposal, an employer would report the service cost component in the same line item or items as other compensation costs arising from services rendered by the affected employees during the period. The other components of net benefit cost would be presented in the income statement, separately from the service cost component and outside a subtotal of income from operations, if one is presented.
The change also addresses the use of separate line items for other components of net benefit costs, and the capitalization of service costs. The amendments would apply to all employers that offer defined benefit pension plans, other post-retirement benefit plans, or other types of benefits accounted for under Topic 715, including not-for-profits.
Comments can be submitted by April 25 on FASB's website.
With a second proposal, Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Changes to the Disclosure Requirements for Defined Benefit Plans, FASB intends to help employers disclose material information while providing an option to exclude immaterial information.
The exposure draft proposes amendments specifically for defined benefit plan disclosures that FASB previously proposed in September 2015 for all disclosures related to materiality in notes to financial statements.
The proposal would apply to all employers that sponsor defined benefit pension or other post-retirement plans. Comments are due April 25 on FASB's website.