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ASC 712 Compensation—Nonretirement Post-Employment Benefits
Perspective and Issues
Subtopic
ASC 712, Compensation—Nonretirement Postemployment Benefits, contains one subtopic:
- ASC 712-10, Overall, which provides guidance and links to other topics containing guidance on nonretirement postemployment benefits.
Overview
ASC 712 provides guidance for employers that provide benefits for former or inactive employees after the employees' termination. These benefits may include counseling, pay continuation, continuation of health care benefits, etc. The FASB sees these as benefits provided in exchange for service.
Definitions of Terms
Inactive Employees. Employees who are not currently rendering service to the employer and who have not been terminated. They include those who have been laid off and those on disability leave, regardless of whether they are expected to return to active status.
Nonretirement Postemployment Benefits. All types of benefits, other than those provided through a pension or other postretirement plan (see Subtopics 715-30 and 715-60), provided to former or inactive employees, their beneficiaries, and covered dependents.
Other Postemployment Benefits. Benefits, other than special or contractual termination benefits, that are provided by an employer to former or inactive employees after employment but before retirement including benefits provided to beneficiaries and covered dependents.
Special Termination Benefits. Benefits that are offered for a short period of time in exchange for employees' voluntary termination of service.
Termination Benefits. Benefits provided by an employer to employees in connection with their termination of employment. They may be either special termination benefits offered only for a short period of time or contractual benefits required by the terms of a plan only if a specified event, such as a plant closing, occurs.
Concepts, Rules, and Examples
Initial Measurement and Recognition
ASC 712 applies the criteria set forth by ASC 710, Compensation—General, to accrue an obligation for postemployment benefits other than pensions if:
- Services have been performed by employees,
- Employees' rights accumulate or vest,
- Payment is probable, and
- The amount can be reasonably estimable.
If these benefits do not vest or accumulate, ASC 450, Contingencies, applies. If neither ASC 710 nor ASC 450 is applicable because the amount is not reasonably estimable, this fact must be disclosed. (ASC 712-10-25-4 and 25-5)
Subsequent Measurement
To the extent they apply, entities may refer to ASC 715-30 and 715-60 for guidance in measuring their postemployment benefit obligations.
Other Sources
| See ASC Location––Wiley GAAP Chapter | For information on… |
| ASC 715-10-25 | Recognition of liabilities for contractual termination benefits or changing benefit plan assumptions in anticipation of a business combination |
| ASC 810-10-15-12(a) | Prohibiting the consolidation of an employee benefit plan subject to the provisions of ASC 712 |