RONA Inc., Bank of Montreal, and Air Canada are all Canadian companies with defined benefit plans. Visit www.sedar.com to access financial statements for the 2011 fiscal year ends for RONA and Air Canada and for the 2012 fiscal year end for the Bank of Montreal.
Instructions
Analyze the notes to the financial statements of each of the three companies, and provide answers to the following questions.
(a) For each company, identify the following three assumptions:
1. The discount rate
2. The rate of compensation increase that was used to measure the projected benefit obligation
3. The expected long-term rate of return on plan assets
(b) Comment on any significant differences in the assumptions that are used by each firm.
(c) Did any of the companies change their assumptions during the period covered by the notes? If yes, what was the effect on each of the following: the current year's accrued benefit obligation, the plan assets, and the pension expense? Explain.
(d) Identify the types of plans and the assumptions that underlie any future benefit plans other than pensions. Are these similar across the three companies? Comment on how any differences would affect an intercompany analysis.
(e) Are the pension plans and post-retirement plans in a deficit or surplus position? What are the amounts that have been reported on the statements of financial position?