Analyzing and Interpreting Pension Disclosures Assume E.I. Du Pont De Nemours and Co.'s 10-K report has the following disclosures related to its retirement plans ($ millions). Pension Benefits ($ millions) 2010 2009 Change in benefit obligation Benefit obligation at beginning of year $ 22,849 $ 22,935 Service cost 383 388 Interest cost 1,228 1,192 Plan participants' contributions 13 9 Acturarial loss (gain) (728) (244) Benefits paid (1,544) (1,506) Amendments -- (1) Net effects of acquisitions/divestitures 5 76 Benefit obligation at end of year $ 22,206 $ 22,849 Change in plan assets Fair value of plan assets at beginning of year $ 22,389 $ 20,272 Actual gain on plan assets 1,903 3,306 Employer contributions 277 280 Plan participants' contributions 13 9 Benefits paid (1,544) (1,506) Net effects of acquisitions/divestitures -- 28 Fair value of plan assets at end of year $ 23,038 $ 22,389 Funded status U.S. plans with plan assets $ 2,481 $ 892 Non-U.S. plans with plan assets (90) (317) All other plans (1,559) (1,515) Total $ 832 $ (940) Pension Benefits (in millions) Components of net periodic benefit cost (credit) 2010 2009 2008 Net periodic benefit Service cost $ 383 $ 388 $ 349 Interest cost 1,228 1,192 1,160 Expected return on plan assets (1,795) (1,648) (1,416) Amortization of loss 117 227 303 Amortization of prior service cost 18 29 37 Curtailment/settlement (gain) loss -- 3 (1) Net periodic benefit cost $ (49) $ 191 $ 432 Weighted-avg. assumptions used for net periodic benefit cost for years ended Dec. 31 2010 2009 Discount Rate 5.56% 5.43% Expected return on plan assets 8.02% 8.13% Rate of compensation increase 4.32% 4.31% The following benefit payments, which reflect future service, as appropriate, are expected to be paid: ($ millions) Pension Benefits 2008 $ 1,525 2009 1,507 2010 1,493 2011 1,500 2012 1,500 Years 2013-2017 7,690 HINT: Do not use negative signs with your answers. (a) How much pension expense (revenue) does DuPont report in its 2010 income statement? DuPont reports pension expense or revenue of $----- million. (b) DuPont reports a $1,795 million expected return on pension plan assets as an offset to 2010 pension expense. Estimate what the expected return would have been had Dupont not changed the assumption on the expected return in 2010. (Round your dollar answers to the nearest whole number.) $----- million What is DuPont's actual gain or loss realized on its 2010 pension plan assets? ----- ($ million) gain or loss

Analyzing and Interpreting Pension Disclosures Assume E.I. Du Pont De Nemours and Co.'s 10-K report has the following disclosures related to its retirement plans ($ millions). Pension Benefits ($ millions) 2010 2009 Change in benefit obligation Benefit obligation at beginning of year $ 22,849 $ 22,935 Service cost 383 388 Interest cost 1,228 1,192 Plan participants' contributions 13 9 Acturarial loss (gain) (728) (244) Benefits paid (1,544) (1,506) Amendments -- (1) Net effects of acquisitions/divestitures 5 76 Benefit obligation at end of year $ 22,206 $ 22,849 Change in plan assets Fair value of plan assets at beginning of year $ 22,389 $ 20,272 Actual gain on plan assets 1,903 3,306 Employer contributions 277 280 Plan participants' contributions 13 9 Benefits paid (1,544) (1,506) Net effects of acquisitions/divestitures -- 28 Fair value of plan assets at end of year $ 23,038 $ 22,389 Funded status U.S. plans with plan assets $ 2,481 $ 892 Non-U.S. plans with plan assets (90) (317) All other plans (1,559) (1,515) Total $ 832 $ (940) Pension Benefits (in millions) Components of net periodic benefit cost (credit) 2010 2009 2008 Net periodic benefit Service cost $ 383 $ 388 $ 349 Interest cost 1,228 1,192 1,160 Expected return on plan assets (1,795) (1,648) (1,416) Amortization of loss 117 227 303 Amortization of prior service cost 18 29 37 Curtailment/settlement (gain) loss -- 3 (1) Net periodic benefit cost $ (49) $ 191 $ 432 Weighted-avg. assumptions used for net periodic benefit cost for years ended Dec. 31 2010 2009 Discount Rate 5.56% 5.43% Expected return on plan assets 8.02% 8.13% Rate of compensation increase 4.32% 4.31% The following benefit payments, which reflect future service, as appropriate, are expected to be paid: ($ millions) Pension Benefits 2008 $ 1,525 2009 1,507 2010 1,493 2011 1,500 2012 1,500 Years 2013-2017 7,690 HINT: Do not use negative signs with your answers. (a) How much pension expense (revenue) does DuPont report in its 2010 income statement? DuPont reports pension expense or revenue of $----- million. (b) DuPont reports a $1,795 million expected return on pension plan assets as an offset to 2010 pension expense. Estimate what the expected return would have been had Dupont not changed the assumption on the expected return in 2010. (Round your dollar answers to the nearest whole number.) $----- million What is DuPont's actual gain or loss realized on its 2010 pension plan assets? ----- ($ million) gain or loss

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter19: Accounting For Post Retirement Benefits

Section: Chapter Questions

Problem 3MC

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Analyzing and Interpreting Pension Disclosures
Assume E.I. Du Pont De Nemours and Co.'s 10-K report has the following disclosures related to its retirement plans ($ millions).

	Pension Benefits
($ millions)	2010	2009
Change in benefit obligation
Benefit obligation at beginning of year	$ 22,849	$ 22,935
Service cost	383	388
Interest cost	1,228	1,192
Plan participants' contributions	13	9
Acturarial loss (gain)	(728)	(244)
Benefits paid	(1,544)	(1,506)
Amendments	--	(1)
Net effects of acquisitions/divestitures	5	76
Benefit obligation at end of year	$ 22,206	$ 22,849
Change in plan assets
Fair value of plan assets at beginning of year	$ 22,389	$ 20,272
Actual gain on plan assets	1,903	3,306
Employer contributions	277	280
Plan participants' contributions	13	9
Benefits paid	(1,544)	(1,506)
Net effects of acquisitions/divestitures	--	28
Fair value of plan assets at end of year	$ 23,038	$ 22,389
Funded status
U.S. plans with plan assets	$ 2,481	$ 892
Non-U.S. plans with plan assets	(90)	(317)
All other plans	(1,559)	(1,515)
Total	$ 832	$ (940)

	Pension Benefits (in millions)
Components of net periodic benefit cost (credit)	2010	2009	2008
Net periodic benefit
Service cost	$ 383	$ 388	$ 349
Interest cost	1,228	1,192	1,160
Expected return on plan assets	(1,795)	(1,648)	(1,416)
Amortization of loss	117	227	303
Amortization of prior service cost	18	29	37
Curtailment/settlement (gain) loss	--	3	(1)
Net periodic benefit cost	$ (49)	$ 191	$ 432

Weighted-avg. assumptions used for net periodic benefit cost for years ended Dec. 31	2010	2009
Discount Rate	5.56%	5.43%
Expected return on plan assets	8.02%	8.13%
Rate of compensation increase	4.32%	4.31%

Weighted-avg. assumptions used for net periodic benefit cost for years ended Dec. 31

2010

2009

Discount Rate

5.56%

5.43%

Expected return on plan assets

8.02%

8.13%

Rate of compensation increase

4.32%

4.31%

The following benefit payments, which reflect future service, as appropriate, are expected to be paid:

($ millions)	Pension Benefits
2008	$ 1,525
2009	1,507
2010	1,493
2011	1,500
2012	1,500
Years 2013-2017	7,690

HINT: Do not use negative signs with your answers.

(a) How much pension expense (revenue) does DuPont report in its 2010 income statement?

DuPont reports pension expense or revenue of $----- million.

(b) DuPont reports a $1,795 million expected return on pension plan assets as an offset to 2010 pension expense. Estimate what the expected return would have been had Dupont not changed the assumption on the expected return in 2010. (Round your dollar answers to the nearest whole number.)

$----- million

What is DuPont's actual gain or loss realized on its 2010 pension plan assets?

----- ($ million) gain or loss

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