The Effect of Statement No. 87 on the Financial Reports of Early Adopters

The effect of Financial Accounting Standards Board Statement 87, "Employers' Accounting for Pensions," on the financial reports of corporations that adopted the Statement in 1986 was examined. The study focused on the 265 companies included in the AICPA survey for the 1986 and 1987 editions of Accounting Trends & Techniques. Results of the study include: 1. A significant number of companies with pension plans chose to comply with Statement 87 prior to its deadline. 2. Except for 5 companies, the Statement's initial application either had no material effect on income, caused an increase in aftertax income, or caused a decrease in pension expense. 3. The Statement did not significantly narrow the range of assumptions used in computing pension expense and obligations. 4. The plans of early adopters are generally well-funded, but there are significant differences in the funding statuses of various plans sponsored by a single employer. 5. The initial balance sheet effect was minimal.