Analyzing and Interpreting Pension Disclosures$$Plan Assets and Cash Flow

YUM! Brands Inc. discloses the following pension footnote in its $10-$K report.

Pension Plan Assets $($$ millions$)2018$

Fair value of plan assets at beginning of year $$864$

Actual return on plan assets $(49)$

Employer contributions $13$

Benefits paid $(73)$

Fair value of plan assets at end of year $$755$

a$.$ How does the $$actual return on plan assets$$ of $$(49)$ million affect YUM!$$s reported profits for $2018?$

Answer

Decreases profits

b$.$ YUM! Brands contributed $$13$ million cash to the pension plan investment account $($asset$)$ during the year. Which of the following is true?

Answer

False

i$.$ YUM! recognized the $$13$ million cash payment as a pension expense in $2018.$

Answer

False

ii$.$ YUM! did not recognize the $$13$ million cash payment as a pension expense in $2018$ because it is not tax deductible.

Answer

True

iii. YUM! did not recognize the $$13$ million cash payment as a pension expense in $2018$ because it relates to employees$$ service in prior periods.

Answer

False

iv$.$ YUM! did not recognize the $$13$ million cash payment as a pension expense in $2018$ because benefits of $$73$ million were paid to employees and that amount represents the pension expense.

Answer

False

v$.$ None of the above.

c$.$ YUM!$$s pension plan paid out $$73$ million in benefits during $2018.$ How is this payment reported?

Answer

Reduce plan assets and reduce PBO