Thursday, January 20, 2011

Verizon Changes Accounting for Pensions Resulting in $600M Charge

Verizon Communications adopted a new method of accounting for pensions and other post-employment benefits that recognizes gains and losses in the year they are incurred, rather than amortizing them over time. Under the new method, annual adjustments will be made to reflect actual return on pension plan assets, changes in discount rates and differences from other actuarial assumptions. The impact of this accounting change will result in cumulative pre-tax charges of $600 million for full-year 2010. Verizon said there is no impact on cash flow or pension funding requirements as a result of this change, and there is no change to its pension obligations.