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present value of the employee’s benefit (terminal funding). SFAS
106, par. 8.
SFAS 106 permits an employer to immediately recognize, at the
date of initial application of SFAS 106, obligations that the
employer had not accrued for financial purposes in prior years
(transition obligation10). SFAS 106, par. 260. Immediate
recognition is not permitted after the initial application of SFAS
106.11
Norwest adopted SFAS 106, effective January 1, 1992. As a
10 The transition obligation recognized upon initial
application of SFAS 106 does not include “(a) any previously
unrecognized post-retirement benefit obligation assumed in a
business combination accounted for as a purchase, (b) a plan
initiation, and (c) any plan amendment that improved benefits, to
the extent that those events occur after the issuance of * * *
[SFAS 106].” SFAS 106, par. 261.
11 The Financial Accounting Standards Board concluded that
to permit immediate recognition at any subsequent time would result
in too much variability in financial reporting for a long period of
time.
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Last modified: May 25, 2011