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As part of its simplification initiative to reduce cost and complexity of existing guidance, the Financial Accounting Standards Board (FASB) issued a new Accounting Standard Update (ASU) on April 15 related to defined benefit plans.
The new ASU 2015-04 (Compensation—Retirement Benefits) only applies to employers with fiscal year ends not coinciding with a calendar month end. It allows employers to make an accounting policy election to measure defined benefit plan assets and obligations as of the end of the month closest to their fiscal year end.
In the event an employer makes a contribution or has other significant events (e.g, plan amendment, settlements and or curtailment) occur to the plan between the alternative measurement date and its fiscal year end, the employer is required to account for the changes by making adjustments to reflect the contributions and or significant events (Internal Events). If events external to the entity have an affect on the plan, such as market price or interest rate changes, the employer is required not to remeasure the plan assets or liabilities.
Need further clarification? Contact Doeren Mayhew’s accounting advisors in Michigan, Houston and Ft. Lauderdale to gain more insight on how these changes may affect your accounting methods.
This publication is distributed for informational purposes only, with the understanding that Doeren Mayhew is not rendering legal, accounting, or other professional opinions on specific facts for matters, and, accordingly, assumes no liability whatsoever in connection with its use. Should the reader have any questions regarding any of the news articles, it is recommended that a Doeren Mayhew representative be contacted.
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