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Accounting Standards Update (ASU) 2017-07 – Compensation – Retirement Benefits

01 Sep 2017

The Financial Accounting Standards Board (FASB) has issued an ASU that will change how expenses are presented for companies that sponsor defined benefit plans.

In short, ASU 2017-07 requires companies to present the service cost component of net benefit cost in the income statement line items where they report compensation cost. Gross profit and operating income may be affected for many companies, as compensation cost is generally not presented as a “below the line” expense.

Early adoption of this ASU is permitted. It must be placed into effect for non-public entities beginning in calendar 2019. If this affects you, please reach out to us and we’ll guide you through the implementation process.

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