Financial Accounting Standards Board Fasb 87

Definition of "Financial accounting standards board (fasb) 87"

Regina  Thoenig
  Keller Williams Real Estate

New pension-accounting rule created by the Financial Accounting Standards Board. The objective of this rule is to clarify pension accounting so that investors, employers, and employees will know what the assets and liabilities of a particular pension plan are. The rule requires that a company disclose all relevant figures concerning its pension plan on the face of the company's income statement. Previously, the company could bury these figures in the footnotes of the income statement. Also, under the new disclosure requirement, the expected liabilities of the pension plan must be recalculated annually, assuming market interest rates. Thus, a company's pension liabilities each year will rise or fall according to the market interest rate, thereby affecting the company's income statement and balance sheet.

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