Costs of postretirement benefits other than pension plans should be expensed when paid to the retired employee.

Question

Quizplus · Accepted Answer

Costs of postretirement benefits other than pension plans, such as healthcare and life insurance, should be accrued and expensed over the employees' service years, using actuarial assumptions and estimates. This is because the employer's obligation to provide these benefits arises during the employee's work period, and the benefits will likely continue for many years after retirement. Therefore, the expense recognition should be matched to the employees' service, rather than when the benefits are paid out.

Costs of Postretirement Benefits Other Than Pension Plans Should Be