Pay-As-You-Go Cost Method

Pay-As-You-Go Cost Method is a method of recognizing pension cost only when benefits are paid to retired employees or their beneficiaries.

For defined-benefit plans accounted for under the pay-as-you-go cost method, the amount of pension cost assignable to a cost accounting period shall be measured as the sum of:

• (i) The net amount for any periodic benefits paid for that period, and

• (ii) The level annual installment required to amortize over 15 years any amounts paid to irrevocably settle an obligation for periodic benefits due in current or future cost accounting periods.