Accounting question

[k man]

A non-qualified plan defines the employer as the parent, or any of its subsidiaries, and there are participants from several different subsidiaries. Does the parent company (sponsor) get to book the assets on its books even though it is not the one actually paying the specific employees salary? In this case the employees get paid by the subsidiary that employs them.

[Guest EAKarno]

In a nonqualified plan the assets are not really tied to the liabilities in any formal manner. Thus, if the parent is the one that owns any so-called plan assets then it would record such on its books even though the plan liabilities may lie with the subsidiary which it records on its books. In such a case you will obviously have a mismatch between assets and liabilities which may not be of any importance if they are filing consolidated financials. On the other hand, if the assets are the property of the subsidiary they will be recorded on the books of said subsidiary.

[david rigby]

This may not be on point with your question, but I reviewed the Q&As for SFAS No. 87.

Q.11 reads as follows:

If an employer has a non-qualified pension plan (for tax purposes) that is funded with life insurance policies owned by the employer, should the cash surrender value of those policies be considered plan assets for purposes of applying Statement 87?

A.11. No. If the employer is the owner or beneficiary, the life insurance policies do not qualify as plan assets and the accounting for those policies should be in accordance with FASB Technical Bulletin 85-4, Accounting for Purchases of Life Insurance.

[k man]

EAKarno, I understand the first part of your post but you threw me with the second point. can you explain that again?