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Handbook: Employee benefits

Handbooks | September 2023

Our in-depth guide to accounting for employee benefits under ASC 420, ASC 710, ASC 12, ASC 15 and ASC 718-40.

Using Q&As and examples, our updated guide explains in detail the accounting for general employee compensation, nonretirement post-employee benefits, retirement benefits and employee stock ownership plans (ESOPs).


  • ASC 420, ASC 710, ASC 12, ASC 15 and ASC 718-40
  • All entities

Relevant dates

  • Effective immediately

A significant and changing expense

Wages and salaries are typically the largest component of employee benefits, but they are not the only component. There are myriad other types of benefits – from compensated absences such as vacation days to retirement plans that cover large groups of employees – and the accounting can be complex.

The approach to compensation packages can change rapidly to match movements in the marketplace. The prevailing trend when we first published this Handbook in 2021 emphasized offering incentives to retain and attract employees. In only a few years, economic and social factors, including low attrition, have moved the focus to termination benefit packages as companies downsize and restructure.

And then there are the fluctuations in financial markets that can make it more difficult to project the cost of benefits promised to employees in the future. This too can lead companies to consider changing benefit plans to lessen earnings volatility. More and more companies are moving to a defined contribution retirement plan model, such as a 401(k), to reduce the exposure and uncertainty around funding defined benefit plans.

Amidst this changing landscape of employee benefits, we hope you use this Handbook as a reference. We’ve organized it in a Q&A format that makes it easy to identify the answers to both the common and the more uncommon questions.

Report contents

  • Scope
  • Compensation: General
  • Termination benefits and other nonretirement postemployment benefits
  • Retirement plans: General and defined contribution plans
  • Defined benefit (DB) pension and other postemployment employment benefit (OPEB) plans: Plan assets and obligations
  • DB pension and OPEB plans: Costs
  • DB pension and OPEB plans: Assumptions and attribution
  • DB pension and OPEB plans: Settlements, curtailments and certain termination benefits
  • Retirement plans: Special topics, including multiemployer plans
  • Retirement plans: Disclosure
  • Employee stock ownership plans

Download the document:

Employee benefits

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Meet our team

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Michael Kraehnke
Partner, Dept. of Professional Practice, KPMG US
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Louise Santacruz
Executive Director, Dept. of Professional Practice, KPMG US

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