A.34 ASC 965, Plan Accounting — Health and Welfare Benefit Plans
ASC 965-20
Statement of Changes in Net Assets Available for
Benefits
45-3 The
statement of changes in net assets available for benefits shall
be presented in enough detail to identify the significant
changes during the year, including, as applicable, the
following: . . .
e. The net appreciation or depreciation in fair value.
Net appreciation or depreciation includes realized gains
and losses on investments that were both purchased and
sold during the period as well as unrealized
appreciation or depreciation of the investments held at
year-end.
f. Investment income, excluding the net appreciation or
depreciation . . . .
45-5 The
statement of changes in net assets available for benefits shall
be prepared on a basis that reflects income credited to
participants in the plan and net appreciation or depreciation in
the fair value of only those investment contracts that are not
deemed to be fully benefit responsive.
ASC 965-205
50-1 The plan’s financial statements
shall disclose other information as described in this Subtopic.
Certain of the disclosures relate to plans with accumulated
assets rather than those with trusts that act more as conduits
for benefit payments or insurance premiums. Separate disclosures
may be made to the extent that the plan provides both health and
other welfare benefits. The disclosures shall include, if
applicable, all of the following: . . .
h. Unusual or infrequent events or
transactions occurring after the financial statement date, but
before the financial statements are issued or are available to
be issued (as discussed in Section 855-10-25), that might
significantly affect the usefulness of the financial statements
in an assessment of the plan’s present and future ability to pay
benefits. For example, all of the following shall be
disclosed:
- A plan amendment adopted after the latest financial statement date that significantly increases future benefits attributable to an employee’s service rendered before that date
- A significant change in the fair value of a significant portion of the plan’s assets
- The emergence of a catastrophic claim.
If reasonably determinable, the effects of such events or
transactions shall be disclosed. If such effects are not
reasonably determinable, the reasons why they are not
quantifiable shall be disclosed. . . .
401(h) Accounts
50-5 A plan is not required to provide
investment disclosures (for example, the disclosures required by
Topic 815 on derivatives and hedging and Topic 820 on fair value
measurement) for 401(h) account assets. A plan shall disclose
the name of the defined benefit pension plan that allocated the
funds to the health and welfare benefit plan and that provides
the related investment disclosures.
ASC 965-320
50-1
Ordinarily, information regarding the net appreciation or
depreciation in the fair value less costs to sell, if
significant, of investments shall be disclosed in the notes to
financial statements.
ASC 965-325
45-1
Information regarding a plan’s investments shall be presented in
enough detail to identify the types of investments and shall
indicate whether reported fair values have been measured by
quoted prices in an active market or have been determined
otherwise (paragraph 965-325-50-2 specifies additional
disclosures related to investments).
45-2
Investments measured using fair value in the statement of net
assets available for benefits or in the notes shall be presented
by general type, including the following:
a. Registered investment companies (also known as
mutual funds)
b. Government securities
c. Short-term securities
d. Corporate bonds
e. Common stocks
f. Mortgages . . .
h. Real estate.
For the presentation of fully benefit-responsive investment
contracts, which are measured at contract value, see paragraphs
965-325-35-8 and 965-325-50-2.
50-1
Disclosure of a health and welfare benefit plan’s accounting
policies shall include a description of the valuation techniques
and inputs used to measure the fair value less costs to sell, if
significant, of investments (as required by Section 820-10-50)
and a description of the methods and significant assumptions
used to measure the reported value of insurance contracts.
However, health and welfare benefit plans are exempt from the
requirements in paragraph 820-10-50-2B(a) to disaggregate assets
by nature, characteristics, and risks. The disclosures of
information by classes of assets required by Section 820-10-50
shall be provided by general type of plan assets consistent with
paragraph 965-325-45-2.
Interests in Master
Trusts
50-5 A plan shall disclose the
following in the notes to financial statements for each period
for which a statement of changes in net assets available for
benefits is presented:
- Net appreciation or depreciation in the fair value of investments of the master trust. Net appreciation or depreciation includes realized gains and losses on investments that were both purchased and sold during the period as well as unrealized appreciation or depreciation of the investments held at year-end.
- Investment income (exclusive of (a)).
50-7 In the notes to financial
statements a plan shall include the investments of a master
trust measured using fair value presented by general type of
investment, such as the following, as of the date of each
statement of net assets available for benefits presented:
- Registered investment companies (for example, mutual funds)
- Government securities
- Common-collective trusts
- Pooled separate accounts
- Short-term securities
- Corporate bonds
- Common stocks
- Mortgages
- Real estate.
For the presentation of fully benefit-responsive
investment contracts, which are measured at contract value, see
paragraphs 965-325-35-8 and 965-325-50-2.
Illustrations
55-8 See
Example 2 (paragraph 962-325-55-17) for financial statements
that illustrate certain applications of the provisions of this
Subtopic that apply to the annual financial statements of a
defined contribution plan.