Employers' Presentation of Defined Benefit Retirement Costs Will Change
The FASB issued new guidance that will require employers that sponsor defined benefit plans for pensions and/or other postretirement benefits to 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 include the service cost and outside of any subtotal of operating income, if one is presented. These components will not be eligible for capitalization in assets. The guidance is effective for PBEs for fiscal years beginning after December 15, 2017, and interim periods therein. Early adoption is permitted as of the beginning of an annual period (i.e., only in the first interim period). The guidance provides a practical expedient for disaggregating the service cost component and other components for comparative periods.
(Source: EY AccountingLink - Financial Reporting Briefs - March 2017)