BUSACC1205, Spring 2019 Pension Take Home Assignment

You may prepare this assignment with two other people, for a maximum of three students in a group. Please hand in one completed assignment with all names on it. The assignment must be typed.

Access the June 30, 2018 Annual Report and financial statements for Proctor & Gamble at:http://www.pginvestor.com/CustomPage/Index?keyGenPage=1073748359. Page numbers below refer to the pdf version, not the interactive version.

Questions 1-9 addressP&G'spension plans disclosures. Use information in the financial statements (beginning on p. 37with the auditor's report) and footnote disclosures in Footnote 8 (beginning on p. 53) (NOTE: Consider Pension Benefits only; Ignore Other Postretirement Benefits):

1. What is the amount of the projected benefit obligation (PBO) on the balance sheet date, 6/30/18?
2. What is the amount of the pension plan assets at the balance sheet date, 6/30/18?
3. AreP&G'spension plans over or under funded as of 6/30/18 and by how much? Where is this over or

underfunded amount shown on the balance sheet? Name specific accounts and whether they are current or long term.

4.What is the amount of pension expense for the year ended 6/30/18?

5.What is the amount of cash paid out to retirees during the year ended 6/30/18?

6.What amount did P&G contribute to the pension plan (the company contribution) for the year ended6/30/18?

7.How do the benefit payments (#5) and the company contributions (#6) affect the statement of cash flows? Indicate inflow, outflow, or no effect, as well as the section of the cash flow section.

8.Did the pension plan assets earn the return that P&G expected would be earned? If your answer is no, calculate the amount of the unexpected return or unexpected loss. How and where is this amount recorded in the fiscal 2018 financial statements?

9.How much before tax Accumulated OCI is recorded at 6/30/18 related to pensions? What does this balance represent?

10.NOTE: This question involves accounting covered in Chapter 20.

1. Read the WSJ article entitled "Rewriting Pension History":(http://www.wsj.com/news/articles/SB10001424052748703662804576188843415326976); also posted on CourseWeb
2. If P&G had to changed its method of accounting for pensions in 2018 from deferring the recognition of actuarial gains (losses) arising from pensions into AOCI to immediately recognizing these items on the income statement. When answering this question and the question below, ignore the currency translation adjustments and prior period service costs:
3. How would fiscal 2018 pension expense change ($ amount, increase or decrease)? Show work.
4. Is this change applied prospectively or retrospectively?

Bonus

Prepare the prior period opening balance journal entry that P&G would make as of July 1, 2017 to reflect this change.

*Question about 10 and Bonus