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Reformulating Financial Statements for Pension Contributions Xerox Corporation reports the following pension and retiree health care (Other) footnote as part of its 10-K report. December

Reformulating Financial Statements for Pension Contributions

Xerox Corporation reports the following pension and retiree health care (Other) footnote as part of its 10-K report.

December 31, 2015 ($ millions)

Pension

Benefits

Retiree

Health

Change in Benefit Obligation
Benefit obligation, January 1 $ 12,188 $ 930
Service cost 36 7
Interest cost 295 34
Plan participants contributions 4 14
Actuarial loss (332) (4)
Currency exchange rate changes (538) (25)
Plan amendments and curtailments (17) (31)
Benefits paid/settlements (638) (77)
Benefit obligation, December 31 $ 10,998 $ 848
Change in Plan Assets
Fair value of plan assets, January 1 $ 9,542 $ -
Actual return on plan assets (89) -
Employer contribution 302 63
Plan participants contributions 4 14
Currency exchange rate changes (440) -
Benefits paid/settlements (638) (77)
Other (4) -
Fair value of plan assets, December 31 $ 8,677 $ -
Net funded status at December 31 $ (2,321) $ (848)

December 31, 2015 ($ millions)

Pension

Benefits

Retiree

Health

Components of Net Periodic Benefit Cost
Service cost $ 36 $ 7
Interest cost 295 34
Expected return on plan assets (376) -
Recognized net actuarial loss 96 1
Amortization of prior service credit 2 (18)
Recognized settlement loss 89 -
Recognized curtailment loss - (22)
Defined benefit plans 142 2
Defined contribution plans 100 -
Total net periodic cost $ 242 $ 2
Other Changes in Plan Assets and Benefit Obligations
Recognized in Other Comprehensive Income
Net actuarial loss $ 125 $ (4)
Prior service credit (16) (32)
Amortization of net actuarial loss (185) $(1)
Amortization of net prior service credit (2) 18
Curtailment gain - 22
Total recognized in other comprehensive income $ (78) $ 3

Use the above information, along with the two prior years information below, to answer the requirements.

$ millions

2013 2014
Cash contributions to pension plan $242 $296

a. Use the three-year average of the employer contribution to pension benefits (in dollar terms) to reformulate the statement of cash flows for each of the three years 2013, 2014, and 2015. See Analyst Adjustments 10.2 for guidance in the reformulation process.

Compute the 3 year average employer contribution to pension benefits.

Round to the nearest whole number.

$Answer

($ millions)

Use rounded figure for subsequent computations.

Use negative signs with answers to indicate adjustments that reduce account balances.

Statement of Cash Flow Adjustments 2013 2014 2015
Cash contribution $Answer

$Answer

$Answer

Cash from operations $Answer

$Answer

$Answer

b. Reformulate the balance sheet for each of the three years 2013, 2014, and 2015.

Assume a tax rate of 35%.

Round answers to the nearest whole number.

Use negative signs with answers to indicate adjustments that reduce account balances.

Balance Sheet Adjustments 2013 2014 2015
Cash balance $Answer

$Answer

$Answer

Deferred tax assets $Answer

$Answer

$Answer

Total assets $Answer

$Answer

$Answer

Retained earnings $Answer

$Answer

$Answer

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