Question text Analyzing and Interpreting Pension Footnote—Funded and Reported Am

Question

Question text Analyzing and Interpreting Pension Footnote—Funded and Reported Amounts YUM! Brands, Inc., reports the following pension footnote in Note 14 of its 10-K report. December 31 (In millions) U.S. Pension Plans 2011 Change in benefit obligation Benefit obligation at beginning of year $1,108 Service cost 24 Interest cost 64 Curtailment gain (7) Special termination benefits 5 Benefits paid (40) Actuarial (gain) loss 227 Benefit obligation at end of year $1,381 Change in plan assets Fair value of plan assets at beginning of year $907 Actual return on plan assets 83 Employer contributions 53 Benefits paid (40) Administrative expenses (5) Fair value of plan assets at end of year $998 Funded status $(383) a. Show the computation of the 2011 funded status for Yum. Pension obligation $ Answer million Fair value of the plan assets $ Answer million Answer $ Answer million b. What net pension amount is reported on its 2011 balance sheet? Answer $ Answer million

Explanation / Answer

(a) Project Benefit Obligation :-

Project Benefit Obligation At the beginning :- $ 1108 Add : Service Cost $ 24 Add : Interest Cost $ 64 Less: Curtailment Gain $ (7) Less : Benefits paid $ (40) Add: Acturial Loss $ 227 Add: Termination Benefits $ 5 $ 1381

(b) Beginning Fair Value of Pension Plan Assets :-

Fair Value at the start of the year $ 907 Add : Actual Return on plan Assets $ 83 Add: Employer Contributions $ 53 Less : Benefits Paid $ (40) Less : Administrative Expenses $ (5) Fair Value of Plan at the end of the year $ 998

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