Wiley GAAP: Practical Implementation Guide and Workbook

Chapter 24. EMPLOYEE BENEFITS (ASC 715)

SCOPE

This Standard sets out the accounting and disclosure by employers for employee benefits.

The Standard identifies four main categories of employee benefits:

1. Short-term employee benefits, such as wages, salaries, vocational holiday benefit, sick pay, profit sharing or bonus plans paid within 12 months of the end of the period, and nonmonetary benefits, such as medical care and so on, for current employees

2. Postemployment benefits, such as pensions, postemployment medical benefits, and postemployment life insurance

3. Termination benefits, such as severance pay

4. Other long-term employee benefits, including long-service or sabbatical leave

Postemployment benefits are categorized as either defined contribution plans or defined benefit plans.

DEFINITIONS OF KEY TERMS

(in accordance with ASC 715)

Asset gains and losses. Differences between the actual return on plan assets during a period and the expected return on plan assets for that period. Asset gains and losses include both changes reflected in the market-related value of plan assets and changes not yet reflected in the market-related value (i.e., the difference between the fair value of assets and the market-related value).

Current service cost. The increase in the present value of the defined benefit obligation that occurs as a result of employee service in the current period.

Interest cost. The increase in the period in the present value of the defined benefit obligation that arises because the benefits ...