IAS 19 vs ASC 715: employee benefits

Pensions are where IFRS and US GAAP income statements can differ most for the same company. The balance sheet number is nearly identical, but the expense, and where it appears, is not. This guide compares IAS 19 with ASC 715 side by side, works out the pension cost for the same plan under each, and covers the corridor, plan amendments, the asset ceiling, multiemployer plans, settlements and presentation.

By Mirza Fahad Baig, Chartered Accountant (ICAP). Reviewed by Hamza Fida, Chartered Accountant (ICAP). Updated . 6 minute read.

Short answer

IAS 19 vs ASC 715 measure a defined benefit obligation in the same way, with the projected unit credit method and a high quality corporate bond discount rate, and both show the funded status on the balance sheet. The differences are in the pension cost. IAS 19 charges service cost and net interest, the discount rate applied to the net deficit, to profit or loss, and puts all remeasurements in other comprehensive income permanently. ASC 715 charges service cost and interest cost, deducts an expected long-term return on plan assets, and amortizes prior service cost and actuarial gains and losses from accumulated other comprehensive income into earnings over time, usually using a 10% corridor. IAS 19 recognizes past service cost immediately and limits a surplus with an asset ceiling, which US GAAP does not. US GAAP presents only service cost within operating income. Multiemployer plans, settlements and curtailments also differ. In this guide's example, the same plan costs CU 680 thousand under IAS 19 and CU 570 thousand under ASC 715.

At a glance

Obligation
Measured the same way
Asset return
Discount vs expected
Actuarial losses
OCI vs amortized
Past service cost
Immediate vs amortized
Asset ceiling
IFRS only
Multiemployer DB
DC under US GAAP
IAS 19 vs ASC 715: employee benefitsObligation: Measured the same way; Asset return: Discount vs expected; Actuarial losses: OCI vs amortized; Past service cost: Immediate vs amortized; Asset ceiling: IFRS only; Multiemployer DB: DC under US GAAP.KEY FACTS AT A GLANCEIAS 19 vs ASC 715: employee benefitsObligationMeasured the same wayAsset returnDiscount vs expectedActuarial lossesOCI vs amortizedPast service costImmediate vs amortizedAsset ceilingIFRS onlyMultiemployer DBDC under US GAAPTax BakersIAS 19 vs ASC 715: employee benefitsObligation: Measured the same way; Asset return: Discount vs expected; Actuarial losses: OCI vs amortized; Past service cost: Immediate vs amortized; Asset ceiling: IFRS only; Multiemployer DB: DC under US GAAP.KEY FACTS AT A GLANCEIAS 19 vs ASC 715: employeebenefitsObligationMeasured the same wayAsset returnDiscount vs expectedActuarial lossesOCI vs amortizedPast service costImmediate vs amortizedAsset ceilingIFRS onlyMultiemployer DBDC under US GAAPTax Bakers
Key facts at a glance, as set out in this guide.

What do IAS 19 and ASC 715 have in common?

Both measure the defined benefit obligation with the projected unit credit method and a discount rate based on high quality corporate bond yields; both measure plan assets at fair value; and both recognize the net funded status, the deficit or surplus, on the balance sheet. Defined contribution plans are expensed as contributions fall due under both. See IAS 19 employee benefits.

IAS 19 vs ASC 715: what are the differences?

IAS 19 vs ASC 715 at a glanceIAS 19 vs ASC 715 at a glanceTOPICIFRSUS GAAPExpected return on assetsNot allowedRequiredRecycle actuarial lossesNot allowedRequiredPast service cost at onceRequiredNot allowedAsset ceiling on a surplusRequiredNot allowedDB accounting, multiemployerAllowedNot allowed
The obligation is the same; the cost and its timing are not.
AreaIAS 19ASC 715
Return on plan assets in the costInterest income at the discount rate, within net interestExpected long-term rate of return, usually higher
Actuarial gains and lossesOther comprehensive income, never reclassifiedAccumulated other comprehensive income, amortized into earnings if outside the 10% corridor
Past service cost from amendmentsRecognized immediately in profit or lossRecognized in other comprehensive income and amortized over remaining service
SurplusLimited to the asset ceilingNo ceiling
Multiemployer defined benefit plansDefined benefit accounting if enough information is availableAccounted for like defined contribution plans, with disclosures
SettlementsGain or loss recognized when the settlement occursSettlement accounting required when settlements exceed service cost plus interest cost for the year
PresentationService cost in operating profit; net interest generally in the financing category under IFRS 18Only service cost in operating income; other components outside it

An example: the same plan's cost under each

A plan starts the year with an obligation of CU 10,000 thousand and assets of CU 8,000 thousand. The discount rate is 4%, the expected return on assets 6%, and current service cost CU 600 thousand. Under US GAAP, an unrecognized net actuarial loss of CU 1,500 thousand sits in accumulated other comprehensive income, and active members have an average of 10 years of service left. All figures are in CU thousand. The defined benefit roll-forward (Excel) shows the IAS 19 cost and the ASC 715 cost for the same plan.

Pension cost for the yearIAS 19ASC 715
Service cost600600
Interest cost on the obligation at 4%Net interest 80400
Return on assetsExpected at 6%: (480)
Amortization of net loss above the corridorNone50
Cost in profit or loss680570

US GAAP credits a 6% expected return, CU 480 thousand rather than CU 320 thousand at the discount rate, which lowers the cost, but adds back 50 of amortization: the corridor is 10% of the larger of the obligation and assets, 1,000, so 500 of the 1,500 loss is spread over 10 years. Under IAS 19 that loss stays in other comprehensive income for good, and the asset return is credited only at 4%.

Why do plan amendments hit profit differently?

When a company improves benefits for past service, IAS 19 recognizes the whole past service cost in profit or loss at once, while ASC 715 records it in other comprehensive income and amortizes it over the remaining service of the employees affected. A large amendment can therefore produce a one-off charge under IFRS and a cost spread over years under US GAAP. Curtailment gains and losses are also recognized immediately under IAS 19, while ASC 715 offsets them against amounts in accumulated other comprehensive income first.

What is the asset ceiling, and why does US GAAP not have one?

IAS 19 limits a recognized surplus to the economic benefit available to the company through refunds or reduced future contributions, with IFRIC 14 covering minimum funding requirements. US GAAP recognizes the full surplus. An overfunded plan can therefore show a smaller asset under IFRS.

Where to go next

See IFRS 18 income statement categories for where pension interest goes from 2027, and IFRS vs US GAAP key differences.

Keep going

Our free Excel models work through the examples in these guides, and the comparisons show where IFRS and US GAAP part ways. Every guide names the Chartered Accountant who wrote it and the one who reviewed it.

All IFRS vs US GAAP guides Free Excel models

Questions people ask

What is the main difference between IAS 19 and ASC 715?

IAS 19 uses net interest at the discount rate and keeps remeasurements in OCI permanently; ASC 715 uses an expected return on assets and amortizes actuarial gains and losses and prior service cost into earnings.

Does IFRS have a corridor for actuarial gains and losses?

No. Since 2013, IAS 19 recognizes all remeasurements in other comprehensive income immediately, with no corridor and no recycling.

How is past service cost treated under IFRS and US GAAP?

IAS 19 recognizes it in profit or loss immediately; ASC 715 records it in other comprehensive income and amortizes it over the remaining service period.

Is the pension liability the same under IFRS and US GAAP?

Usually very close, because both use the projected unit credit method and corporate bond discount rates, though the IAS 19 asset ceiling can reduce a surplus.

Sources

The standards, updates and other documents this guide draws on.

  1. IFRS Foundation: IAS 19 Employee Benefits
  2. FASB Accounting Standards Codification: Topic 715, Compensation, Retirement Benefits
  3. Milliman: FASB, IFRS and statutory accounting for pension and OPEB plans

Rules and fees change. If you are reading this long after October 26, 2026, confirm the figures with the source before you rely on them.

IAS 19IAS 19 employee benefits and defined benefit plansIFRS 18IFRS 18 income statement categories: operating, investing and financingAccounting standardsIFRS vs US GAAP: the key differences in one guide

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This guide is general information. It is not tax or legal advice for your situation.