P. 10-3

A plan net position is directly tied to the employer's net pension liability.

The CAFR of North Orange included the statement of fiduciary net position for its employee pension plan presented here:

North Orange Employee Pension Plan Statement of Fiduciary Net Position June 3, 2021 (Dollar amounts in thousands)

Assets

Cash and cash equivalents $ 140,279

Receivables:

Contributions 13,285

Investment income 8,100

Total receivables 21,385

Investments:

Fixed income securities 1,111,088

Domestic equity securities 2,345,543

International equities 870,240

Real estate 511,112

Total investments 4,837,983

Total assets 4,999,647

Liabilities

Investment fees payable 2,890

Due to broker for investments purchase 230,555

Benefits payable to retirees 59,231

Total liabilities 292,676

Net position restricted for pensions $4,706,971

1. A note to the statement indicated that the plan net position was 75 percent of the North Orange (the employer) total pension liability. From this limited amount of information, can you tell how much North Orange would report as its net pension liability?
2. In light of your response to question #1, how do you explain that benefits payable to retirees are only $59,231?
3. Suppose the city reduced its discount rate from 7.75 to 7.50%. How would that reduction affect the pension plan's net position?
4. Suppose the city were to sell common stock for $1,500,000 that it had acquired for $1,000,000. How would such a sale affect the pension liability as reported on the balance sheet of North Orange?