Xerox Corporation reports the following pension and retiree health care ("Other") footnote as part of its \(10-\mathrm{K}\) report.

a. Describe what is meant by service cost and interest cost (the service and interest costs appear both in the reconciliation of the \(\mathrm{PBO}\) and in the computation of pension expense).

b. What is the actual return on the pension and the health care ("Other") plan investments in 2012? Was Xerox's profitability impacted by this amount?

c. Provide an example under which an "actuarial loss," such as the \(\$ 843\) million loss in 2012 that Xerox reports, might arise.

d. What is the source of funds to make payments to retirees?

e. How much did Xerox contribute to its pension and health care plans in 2012?

f. How much cash did retirees receive in 2012 from the pension plan and the health care plan? How much cash did Xerox pay these retirees in 2012?
g. Show the computation of the 2012 funded status for the pension and health care plans.
h. The company reports \(\$ 843\) million "Net actuarial loss" in the table relating to other comprehensive income, a credit of \$3 million relating to "Prior service credit," a loss of \$(189) million relating to "Amortization of net actuarial loss," and a credit of \$23 million relating to "Amortization of prior service credit" in the net periodic benefit cost table. Describe the process by which these amounts are transferred from other comprehensive income to pension expense in the income statement.

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(in millions) Change in Benefit Obligation Benefit obligation, January 1 Service cost.. Interest cost.. Plan participants' contributions Actuarial loss... Currency exchange rate changes Curtailments... Benefits paid/settlements.. Other.... Benefit obligation, December 31. Change in Plan Assets Fair value of plan assets, January 1 Actual return on plan assets... Employer contribution. Plan participants' contributions. Currency exchange rate changes Benefits paid/settlements... Other..... Fair value of plan assets, December 31 Net funded status at December 31.. .... .... .... ... Pension Benefits 2012 2011 $10,505 $ 9,731 186 612 10 916 195 552 9 1,017 232 (1) (765) (3) $11,741 $8,277 792 494 9 197 (765) (85) (870) 5 $10,505 $7,940 694 556 10 (57) (870) 4 Retiree Health 2012 2011 $ 9,004 $8,277 $(2,737) $1,007 9 42 19 18 4 - (103) (7) $ 989 84 19 (103) $ 1,006 8 47 33 26 (106) (4) $ 1,007 73 33 (106) $ $ (2,228) $ (989) $(1,007)