QUESTION 1 The following pension information was disclosed by Abbott Laboratories: Defined Benefit Plans (millions) Projected benefit obligations, January 1 Service cost-benefits earned during the year Interest cost on projected benefit obligations Gains (losses). primarily changes in discount rates, plan design changes, law changes and differences between actual and estimated health care costs. 2016 $7,820 263 288 2015 8,345 307 314 645) (242) (574) (230) (117) Benefits paid Business dispositions Other, including foreign currency translation Projected benefit obligations, December 31 $8.517 $7.820 Plans assets at fair value, January1 Actual return (loss) on plans' assets Company contributions Benefits paid $6,772 631 582 (242 $6,754 (56) 579 (230) (113) (162) B Paid Business dispositions Other, including foreign currency translation Plans assets at fair value, December 31 (201 7.542 $6.772 Required a. What is the funded status of the pension plan in 2016 and 2015? b. How does the funded status affect Abbott's 2016 balance sheet? c. What is service cost? How does it affect Abbott Labs' total pension expense for the year? d. How much did Abbott Labs contribute to the pension plan during 20162 How does that compare to the contribution in 2015? e. What amount of pension benefits were paid to former Abbott Labs' employees during the year? Why do the benefits paid affect both the pension obligation and the pension assets? QUESTION 1 The following pension information was disclosed by Abbott Laboratories: Defined Benefit Plans (millions) Projected benefit obligations, January 1 Service cost-benefits earned during the year Interest cost on projected benefit obligations Gains (losses). primarily changes in discount rates, plan design changes, law changes and differences between actual and estimated health care costs. 2016 $7,820 263 288 2015 8,345 307 314 645) (242) (574) (230) (117) Benefits paid Business dispositions Other, including foreign currency translation Projected benefit obligations, December 31 $8.517 $7.820 Plans assets at fair value, January1 Actual return (loss) on plans' assets Company contributions Benefits paid $6,772 631 582 (242 $6,754 (56) 579 (230) (113) (162) B Paid Business dispositions Other, including foreign currency translation Plans assets at fair value, December 31 (201 7.542 $6.772 Required a. What is the funded status of the pension plan in 2016 and 2015? b. How does the funded status affect Abbott's 2016 balance sheet? c. What is service cost? How does it affect Abbott Labs' total pension expense for the year? d. How much did Abbott Labs contribute to the pension plan during 20162 How does that compare to the contribution in 2015? e. What amount of pension benefits were paid to former Abbott Labs' employees during the year? Why do the benefits paid affect both the pension obligation and the pension assets
