Calculation of Pension Expense And Underfunded Retirement Plan
Question
1. Taylor Corp reported the following items in the 2012 pension footnote (in millions).
|
Service cost |
$1,012 |
|
Benefits paid to retirees |
290 |
|
Interest cost |
980 |
|
Actual returns on pension plan assets |
1,400 |
|
Expected returns on pension plan assets |
1,540 |
|
Amortization of deferred amounts |
$ 62 |
2. Buckeye Inc. has a defined benefit retirement plan. The company’s 2012 annual report includes the following excerpt about these plans (in millions):
|
Projected benefit obligations, January 1, 2012 |
$8,606 |
|
Service cost — benefits earned during the year |
332 |
|
Interest cost on projected benefit obligations |
446 |
|
Actuarial losses (gains) |
608 |
|
Benefits paid |
(294) |
|
Settlement |
(776) |
|
Other, primarily foreign currency translation |
41 |
|
Projected benefit obligations, December 31, 2012 |
$8,963 |
|
|
|
|
Plans' assets at fair value, January 1, 2012 |
$7,451 |
|
Actual return on plan assets |
29 |
|
Company contributions |
394 |
|
Benefits paid |
(294) |
|
Settlement |
(776) |
|
Other, primarily foreign currency translation |
157 |
|
Plan assets at fair value, December 31, 2012 |
$6,961 |
What is the funded status of this plan?
Summary
These short answer questions belong to Finance. The 1st question is about calculating pension expense and the 2nd question is about calculation of underfunded retirement plan.
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