YC M! Brands, Inc., discloses the following pension footnote in its \(10-\mathrm{K}\) report.

a. Explain the terms "service cost" and "interest cost."

b. How do actuarial losses arise?

c. The fair market value of YUM!'s plan assets is \(\$ 732\) million as of 2007 . What is the funded status of the plan, and how will this be reflected on YUM!'s balance sheet?

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Pension Benefit Obligation ($ millions) 2007 2006 Change in benefit obligation Benefit obligation at beginning of year... $864 $815 Service cost 33 34 Interest cost 50 46 Plan amendments. 4 (3) Curtailment gain.... (4) (1) Benefits and expenses paid. (34) (29) Actuarial (gain) loss.... (71) 2 Benefit obligation at end of year .. $842 $864