Question
Analyzing and Interpreting Pension Disclosures E.I. Du Pont De Nemours and Co.'s 10-K report has the following disclosures related to its retirement plans ($ millions).
Analyzing and Interpreting Pension Disclosures E.I. Du Pont De Nemours and Co.'s 10-K report has the following disclosures related to its retirement plans ($ millions).
Obligations and Funded Status | Pension Benefits | |
---|---|---|
December 31 ($ millions) | 2012 | 2011 |
Change in benefit obligation | ||
Benefit obligation at beginning of year | $ 27,083 | $ 23,924 |
Service cost | 277 | 249 |
Interest cost | 1,165 | 1,253 |
Plan participants' contributions | 24 | 21 |
Acturarial loss | 2,245 | 3,062 |
Benefits paid | (1,593) | (1,610) |
Amendments | (22) | 2 |
Net effects of acquisitions/divestitures | -- | 182 |
Benefit obligation at end of year | $ 29,179 | $ 27,083 |
Change in plan assets | ||
Fair value of plan assets at beginning of year | $ 17,794 | $ 18,403 |
Actual gain on plan assets | 2,326 | 471 |
Employer contributions | 848 | 341 |
Plan participants' contributions | 24 | 21 |
Benefits paid | (1,593) | (1,610) |
Net effects of acquisitions/divestitures | -- | 168 |
Fair value of plan assets at end of year | $ 19,399 | $ 17,794 |
Funded status | ||
U.S. plans with plan assets | $ (6,625) | $ 892 |
Non-U.S. plans with plan assets | (1,443) | (317) |
All other plans | (1,712) | (1,515) |
Total | $ (9,780) | $ (9,289) |
Amount recognized in the Consolidated Balance | ||
Sheets consist of: | ||
Other assets | $5 | (4) |
Other accrued liabilities | (110) | (107) |
Other liabilities | (9,303) | (9,186) |
Liabilities related to assets held for sale | (372) | -- |
Net amount recognized | (9,780) | (9,289) |
Pension Benefits (in millions) | |||
---|---|---|---|
Components of net periodic benefit cost (credit) and amounts recognized in other comprehensive income | 2012 | 2011 | 2010 |
Net periodic benefit | |||
Service cost | $ 277 | $ 249 | $ 207 |
Interest cost | 1,165 | 1,253 | 1,262 |
Expected return on plan assets | (1,517) | (1,475) | (1,435) |
Amortization of loss | 887 | 613 | 507 |
Amortization of prior service cost | 13 | 16 | 16 |
Curtailment/settlement loss | 7 | -- | -- |
Net periodic benefit cost | $ 832 | $ 656 | $ 557 |
Changes in plan assets and benefit obligations recognized in other comprehensive income | |||
Net loss | 1,433 | $4,069 | $635 |
Amortization of loss | (887) | (613) | (507) |
Prior service (benefit) cost | (22) | 2 | -- |
Amortization of prior service cost | (13) | (16) | (16) |
Curtailment/settlement loss | (7) | -- | -- |
Total loss recognize in other comprehensive income | 504 | 3,442 | 112 |
Noncontrolling interest | (1) | (11) | (1) |
Accumulated other comprehensive income assumed from purchase of noncontrolling interest | 25 | -- | -- |
Total loss recognized in other comprehensive income, attributable to DuPont | $ 528 | $3,431 | $111 |
Total recognized in net periodic benefit cost and other comprehensive income | $(1,360) | $4,087 | $668 |
Weighted-avg. assumptions used for net periodic benefit cost for years ended Dec. 31 | 2012 | 2011 | 2010 |
---|---|---|---|
Dicsount Rate | 4.32% | 5.32% | 5.80% |
Expected return on plan assets | 8.61% | 8.73% | 8.64% |
Rate of compensation increase | 4.18% | 4.24% | 4.24% |
The following benefit payments, which reflect future service, as appropriate, are expected to be paid:
($ millions) | Pension Benefits |
---|---|
2013 | $1,629 |
2014 | 1,604 |
2015 | 1,629 |
2016 | 1,637 |
2017 | 1,667 |
Years 2018-2022 | 8,678 |
HINT: Do not use negative signs with your answers.
(a) How much pension expense (revenue) does DuPont report in its 2012 income statement?
(b) DuPont reports a $1,517 million expected return on pension plan assets as an offset to 2012 pension expense. Approximately, how is this amount computed (estimate from the numbers reported)?
(c)DuPont's pension plan is overfunded or underfunded?by how much ?
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