Question
Caterpillar, Inc. discloses the following pension footnote in its 2016 10-K report (in millions): U.S. Pension Benefits 2016 Change in benefit obligation Benefit obligation, beginning
Caterpillar, Inc. discloses the following pension footnote in its 2016 10-K report (in millions):
U.S. Pension Benefits | 2016 |
|
Change in benefit obligation |
|
|
Benefit obligation, beginning of year | $15,792 |
|
Service cost | 119 |
|
Interest cost | 517 |
|
Plan amendments | --- |
|
Actuarial losses (gains) | 767 |
|
Foreign currency exchange rates | --- |
|
Participant contributions | --- |
|
Benefits paid - gross | (970 | ) |
Less: federal subsidy on benefits paid | --- |
|
Curtailments, settlements and termination benefits | (7 | ) |
Benefit obligation, end of year | $16,218 |
|
The fair value of Caterpillars U.S. pension assets is $11,354 million as of 2016. What is the funded status of the plan, and how will this be reflected on Caterpillars balance sheet?
Select one:
A. The pension plan is overfunded by $4,438 million and is reported as an asset on the companys balance sheet.
B. The pension plan is underfunded by $4,864 million and is reported as a liability on the companys balance sheet.
C. The pension plan is overfunded by $4,864 million and is reported as an asset on the companys balance sheet.
D. The pension plan is underfunded by $6,804 million and is reported as a liability on the companys balance sheet.
E. The pension plan is underfunded by $4,438 million and is reported as a liability on the companys balance sheet.
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