How must post-employment benefits be recorded according to ASC 715?

The correct approach to recording post-employment benefits according to ASC 715 is that these benefits must be recognized during the period the employees work. This principle aligns with the accrual accounting method, which states that expenses should be recognized in the period in which they are incurred, not necessarily when cash changes hands.

By accruing the expense during the employees' service period, the company can better match its expenses with the revenue generated by those employees, thereby reflecting a more accurate financial picture. Recording the benefits in this manner also helps to ensure that the costs associated with providing retirement benefits are anticipated and accounted for over the years an employee works, rather than waiting until the actual payment is made at retirement.

In contrast, recognizing the expense only when the benefits are paid after retirement would not accurately reflect the obligation incurred during the employees' working years. Similarly, limiting recognition to the end of the fiscal year or considering it a one-time expense at retirement fails to capture the ongoing nature of these benefits and the commitment made to employees as they accumulate service time. Thus, the critical point is that the recording of post-employment benefits should occur progressively as the employees earn their benefits throughout their career.