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U.S. GAAP: Accounting for Pensions |
IFRS: Accounting for Pensions |
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Defined benefit plans; use of projected unit credit method required to match expense to periods of service; smoothing is accomplished by deferred recognition of actuarial gains and losses, amortization of prior service costs, et al.
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Methodology very similar to that under U.S. GAAP, with deferred recognition of actuarial gains or losses. However, past service costs are recognized immediately, not deferred |
| Past service costs amortized over service period or life expectancy of workers |
Past service costs expensed immediately
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| Actuarial gains and losses cannot be recognized in equity; are to be deferred and amortized to pension expense over expected term of plan participants to the extent that defined “corridor” is exceeded |
Actuarial gains and losses can be recognized in equity rather than earnings under amendment to IAS 19 effective in 2006; if in earnings, either immediate recognition or amortization similar to U.S. GAAP is permissible
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Recognition of a minimum liability on the statement of financial position to at least the unfunded accu-mulated pension benefit obligation
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No minimum liability to be reported in the statement of financial position |
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No limitation on recognition of pension assets
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Limitation on recognition of pension assets |
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Curtailment gains recognized only when employees terminate or plan suspension is adopted, computed differently than under IFRS
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Curtailment gains or losses recognized when announced; computed differently than U.S. GAAP |
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Anticipating changes in the law that would affect variables such as state medical or social security benefits expressly prohibited
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Anticipate changes in future postemployment benefits based on its expectations in the law |
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Termination benefits expensed when employees accept and amount can be estimated, recognize contractual benefits when it is probable that employees will accept
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Termination benefits expensed when employer is committed to pay these |
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Expense recognition for certain types of equity compensation benefits; opposed to mandatory stock compensation expensing; prior service cost to be amortized over the expected service life of existing employees; contributions to multiemployer plans expenses
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Expense for equity compensation benefits not recognized, but current agenda item; prior service cost related to retirees and active vested employees to be expensed; benefit obligation for multiemployer recognized |
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No limitation on amount of pension plan asset (in connection with overfunding) that can be presented on statement of financial position
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Statement of financial position asset recognition limited by complex rules |
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Joint convergence project with IASB/FASB is on-going, with many complex issues to be addressed
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Joint convergence project with IASB/FASB is on-going, with many complex issues to be addressed |
