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)	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

Weighted-avg. assumptions used for net periodic benefit cost for years ended Dec. 31	2012	2011	2010
Discount 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?

DuPont reports pension Answerexpenserevenue of $Answer million.

(b) DuPont reports a $1,517 million expected return on pension plan assets as an offset to 2012 pension expense. Estimate what the expected return would have been had Dupont not changed the assumption on the expected return in 2012. (Round your dollar answers to the nearest whole number.)

$Answer million What is DuPont's actual gain or loss realized on its 2012 pension plan assets?

Answer ($ million) Answergainloss (c) What main factors affected DuPont's pension plan assets and pension liability during 2012?

Investment gains and employer contributions increased the plan assets. Service costs, interest costs, and actuarial losses increased the pension liability, and benefit payments reduced the liability. Benefits were paid directly by the company and did not affect plan assets

Investment gains and employer contributions increased the plan assets, and benefits paid reduced plan assets. Service costs and actuarial losses increased the pension liability, and benefit payments reduced the liability. Interest reflects the amount the company paid to its lenders and did not affect the pension obligation directly.

Investment gains and employer contributions increased the plan assets, and benefits paid reduced plan assets. Service costs, interest costs and actuarial losses increased the pension liability, and benefit payments reduced the liability.

Investment gains and employer contributions increased the plan assets, and benefits paid reduced plan assets. Service costs, interest costs and actuarial losses decreased the pension liability, and benefit payments reduced the liability.

(d) What does the term funded status mean? What is the funded status of the 2012 DuPont pension plans?

"Funded status" reveals how much cash the plan has.

"Funded status" reflects the contributions that the company has made to the plan.

"Funded status" is the excess or deficiency of the pension obligation over plan assets.

"Funded status" refers to the extent to which the plan assets are invested in mutual funds.

DuPont's pension plan is Answeroverfundedunderfunded by $Answer million (e) DuPont decreased its discount rate from 5.32% to 4.32% in 2012. What effect(s) does this decreasehave on its balance sheet and its income statement?

A decrease in the discount rate increases the PBO and increases pension cost.

A decrease in the discount rate increases the PBO and decreases pension cost.

A decrease in the discount rate reduces the PBO and decreases pension cost.

A decrease in the discount rate increases the PBO and has no effect on pension cost.

(f) How did DuPont's pension plan affect the company's cash flow in 2012?

The company's cash flow increased as the increase in pension assets more than offset the increase in the PBO.

There was no effect on the company's cash flow as all benefit payments are paid from plan assets.

The company contributed cash to its pension plan in 2012. This contribution directly affected the company's cash flow.

The company's cash flow increased by the gains on the plan's investment portfolio and decreased by the benefits paid to plan participants.

(g) Explain how the returns on pension assets affect the amount of cash that DuPont must contribute to fund the pension plan.

Should pension investments decline as a result of a decline in the financial markets, DuPont might be required to increase its cash contribution to the pension plan.

Asset returns have no effect on DuPont's cash flow because they are recognized in the pension plan and not on the company's financial statements.

Asset returns have no effect on DuPont's cash flow because increases in the PBO provide whatever financing the plan needs.

Asset returns have no effect on DuPont's cash flow because employee contributions make up any shortfall.