While not explicitly addressed in the authoritative literature, we believe that the cost of providing other fringe benefits (including medical, life insurance, or other similar plans) to active employees should be recognized as the costs are incurred as a component of employee compensation for the current period. This could either be as insurance premiums are paid for benefits funded by third-party insurers or on an incurred-but-not-recorded basis (see FSP 23.8) for self-insured benefits. Refer to LI 5 for further discussion of the accounting for certain life insurance arrangements provided outside of a pension or OPEB plan. Life insurance benefits provided through a pension or OPEB plan are accounted for under ASC 715.

Companies may also offer loans to employees, either interest free or at below market interest rates. The employee is benefiting from receiving the below market interest rate, and the company is effectively forfeiting interest income that it could otherwise earn on a similar loan with an unrelated third party. ASC 835-30-35-2 and LI 6.3.1 indicate that interest should be imputed if a note has a stated interest rate below market rates. In effect, there is an imputed discount on the loan. The employee receives cash for the face amount of the loan but the present value of the obligation is less than the full face amount. The discount should be recognized as compensation expense. Interest income from accreting the loan to its face amount should be accreted using the interest method under ASC 835-30-20 as discussed in LI 6.5. If continued service is required to earn this benefit — for example, if the loan becomes immediately repayable at the full face amount if the employee terminates prior to the stated maturity of the loan — compensation expense should be recognized over the period of required service, typically on a straight-line basis.