Interpreting retirement plan disclosures. Exhibits 11.18 and 11.19 present selected information from the notes to the financial statements of a beverage company regarding its U.S. pension and health care retirement plans.

a. What is the likely reason for the actuarial gains in the pension and health care obligations during 2008?

b. Did the pension plan investments perform up to expectations during 2007 and 2008? Explain.

c. Why is the expected return on health care assets equal to zero in each year?

d. Prepare an analysis that explains the change in prior service cost for pension plans from $5 million at the end of 2007 to $13 million at the end of 2008.

e. Prepare an analysis that explains the change in the net actuarial loss for pension plans from $2,285 million at the end of 2007 to $1,836 million at the end of 2008.
f. Prepare an analysis that explains the change in the prior service credit for health care plans from $114 million at the end of 2007 to $101 million at the end of 2008.
g. Prepare an analysis that explains the change in the net actuarial loss for health care plans from $419 million at the end of 2007 to $364 million at the end of 2008.
h. Give the journal entry that this firm would make at the end of 2008 to recognize net pension expense, pension funding, and the change in balance sheet accounts for its pension plan.
i. Give the journal entry that this firm would make at the end of 2008 to recognize net health care expense, health care funding, and the change in balance sheet accounts for its health careplan

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Elements of U.S. Pension and Health Care Expense (amounts in millions) (Problem 31) EXHIBIT 11.18 U.S. Pension Plans Health Care Plans 2007 2006 2008 2007 2006 2008 $ 193 $ 245 $ 213 $ 46 $ 40 Service Cost... $ 38 Interest Cost 319 296 271 72 78 72 (325) Expected Return on Assets (391) (344) Prior Service Cost (13) (11) Actuarial Loss 164 106 81 21 26 19 ..... Net Expense.. $ 226 $ 340 $ 274 $126 $133 $121