How should funded status be shown on the balance sheet for underfunded postretirement benefit plans under US GAAP?

Funded status for underfunded postretirement benefit plans is reported under U.S. GAAP as the difference between the fair value of plan assets and the benefit obligations. When a plan is underfunded, it means that the obligations exceed the assets, creating a liability situation.

In this context, the funded status is reflected on the balance sheet as a liability. Given that postretirement benefit plans often involve long-term commitments, the liability can be classified as either current or non-current. Current liabilities are due within one year, while non-current liabilities extend beyond one year.

Thus, recognizing the possibility that portions of the liability may represent obligations due within one year or long-term obligations, presenting the funded status as a current or non-current liability accurately reflects the nature and timing of the benefit obligations to be settled. This approach aligns with the relevant accounting standards and provides users of the financial statements with a clear understanding of the company's financial position concerning its postretirement benefits.