The following information is taken from the annual report of The Coca-Cola Company:

Discuss whether Coca-Cola’s pension plans are fully funded at year-end of Year 1 and Year 2. Did the company’s funding improve from Year 1 to Year 2? The footnotes reveal that Coca-Cola changed the discount rate that it used to discount its benefit obligations from 5.8 percent in Year 1 to 5.4 percent in Year 2; how would this change likely impact the value of Coca-Cola’s benefit obligation?

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Pension Plans ($ millions) Year 1 Year 2 Benefit obligations (at end of year). $2,576 $2,904 Fair value of plan assets.. 1,810 2,221