Mini Exercise M10-17: Analyzing and Interpreting Pension DisclosuresPBO and Funded Status

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

Pension Benefit Obligation ($ millions)	2015
Change in benefit obligation
Benefit obligation at beginning of year	$1,301
Service cost	18
Interest costs	55
Plan amendments	28
Curtailments	(2)
Special termination benefits	1
Benefits paid	(50)
Settlements	(16)
Actuarial (gain) loss	(196)
Administrative Expense	(5)
Benefit obligation at end of year	$1,134

1. Explain the terms service cost and Interest Cost
2. How do actuarial losses arise?
3. The fair value of YUM!s pension assets is $1,004 million as of 2015. What is the funded status of the plan and how will this be reflected on YUM!s balance sheet?