Which statement is required under US GAAP for a defined benefit plan?

• A. Statement of changes in employee contributions
• B. Statement of net assets available for benefits
• C. Statement of operating expenses
• D. Statement of income tax liabilities

Answer: (B)

Under US GAAP, a defined benefit plan is required to present a statement of net assets available for benefits. This statement provides critical information about the assets held by the plan that are designated to pay benefits to participants. It highlights the financial position of the plan by showing the value of the investments and other assets that can be utilized to satisfy the plan’s future obligations to its members.

In the context of pension reporting, this statement allows stakeholders—including plan participants, employers, and regulators—to assess the liquidity and overall financial health of the plan. It is essential for understanding how well the plan is funded and whether it can meet its obligations to beneficiaries.

The requirement for a statement of net assets available for benefits stands in contrast to the other options, which do not specifically address the elements that are fundamental to the reporting of a defined benefit plan's financial condition. By focusing on net assets, the statement aligns with GAAP's overall aim to provide transparency regarding a plan's capacity to fulfill its promises to its participants.