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FASB is kicking off phase two in its work on FAS 158

In late March or early April, the Financial Accounting Standards Board (FASB) is set to take up the thorny issue of measurement when it comes ...

By Staff Writer | Updated on March 06, 2007

In late March or early April, the Financial Accounting Standards Board (FASB) is set to take up the thorny issue of measurement when it comes to including liabilities and assets from defined benefit (DB) plans and other post-employment benefits (OPEB) on corporate income statements as prescribed in FAS 158. According to John Steele, a senior consulting actuary in the retirement practice at Watson Wyatt Worldwide Inc., FASB will need to address four principal issues: 1) liability measurement; 2) profit and loss recognition; 3) classification of the pension expense; and 4) consolidation of pension liabilities on the balance sheet.

In the area of liability measurement, FASB will have to decide what are the obligations that need to be measured, what assumptions to use in measuring those obligations, and how to apply fair value principles in those liabilities. In P&L recognition, FASB will grapple with whether to keep or get rid of delayed cost recognition (smoothing) of pension expenses on the income statement.

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