Pension service cost presentation has one role in the employer's benefit accounting. Current guidance presents service cost with other employee compensation. Other net benefit-cost components appear separately outside operating income when that subtotal is presented.
Apply it
For $1.4 million total pension cost, Cedar Trail presents $1.2 million service cost with compensation and the $200,000 net nonservice amount on the separate rail.
Common mistake
Do not assume that all pension cost components belong beside payroll expense. Service cost follows compensation presentation; the other components are presented separately outside operating income when required. That error would put nonservice components in operating lines that are reserved for employee compensation cost, which can distort reported operating income.
Keep the boundary clear
The nonservice amount contains several components and should not be relabeled interest expense. Presentation follows the entity's statements and current guidance.
Authority
Read ASC 715-20-45-3A for separate presentation of service and nonservice components.
Put the concept to work
Apply this concept
- Explain and apply pension service cost presentation within a reconciled employer benefit-plan workpaper using supplied authoritative and actuarial facts.
Learning resources
Choose a lesson, try an application, or inspect the sources behind this concept.
Build on these ideas
- Net periodic pension cost — Apply
To apply this concept: Required. This prior schedule supplies a required amount or classification.