The following pension information was disclosed by Abbott Laboratories: Defined BenefitPlans (in millions) 2016 2015 Projected benefit obligations, January 1 $ 7,820 $ 8,345 Service cost — benefits earned during the year 263 307 Interest cost on projected benefit obligations 288 314 (Gains) losses, primarily changes in discount rates, plan design changes, law changes and differences between actual and estimated health care costs 645 (574 ) Benefits paid (242 ) (230 ) Business dispositions — (117 ) Other, including foreign currency translation (257 ) (225 ) Projected benefit obligations, December 31 $ 8,517 $ 7,820 Plan assets at fair value, January 1 $ 6,772 $ 6,754 Actual return (loss) on plans' assets 631 (56 ) Company contributions 582 579 Benefits paid (242 ) (230 ) Business dispositions — (113 ) Other, including foreign currency translation (201 ) (162 ) Plan assets at fair value, December 31 $ 7,542 $ 6,772 Determine the funded status of the pension plan in 2016 and 2015. Explain how the funded status affects Abbott’s 2016 balance sheet. Describe how service cost affects Abbott Labs’ total pension expense for 2016. Explain how benefits paid affect both the pension obligation and the pension assets?
The following pension information was disclosed by Abbott Laboratories: Defined BenefitPlans (in millions) 2016 2015 Projected benefit obligations, January 1 $ 7,820 $ 8,345 Service cost — benefits earned during the year 263 307 Interest cost on projected benefit obligations 288 314 (Gains) losses, primarily changes in discount rates, plan design changes, law changes and differences between actual and estimated health care costs 645 (574 ) Benefits paid (242 ) (230 ) Business dispositions — (117 ) Other, including foreign currency translation (257 ) (225 ) Projected benefit obligations, December 31 $ 8,517 $ 7,820 Plan assets at fair value, January 1 $ 6,772 $ 6,754 Actual return (loss) on plans' assets 631 (56 ) Company contributions 582 579 Benefits paid (242 ) (230 ) Business dispositions — (113 ) Other, including foreign currency translation (201 ) (162 ) Plan assets at fair value, December 31 $ 7,542 $ 6,772 Determine the funded status of the pension plan in 2016 and 2015. Explain how the funded status affects Abbott’s 2016 balance sheet. Describe how service cost affects Abbott Labs’ total pension expense for 2016. Explain how benefits paid affect both the pension obligation and the pension assets?
Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Chapter9: Operating Activities
Section: Chapter Questions
Problem 13QE
Related questions
Question
- The following pension information was disclosed by Abbott Laboratories:
|
|
|
Defined Benefit |
|
||||
|
(in millions) |
|
2016 |
|
2015 |
|
||
|
Projected benefit obligations, January 1 |
|
$ |
7,820 |
|
$ |
8,345 |
|
|
Service cost — benefits earned during the year |
|
|
263 |
|
|
307 |
|
|
Interest cost on projected benefit obligations |
|
|
288 |
|
|
314 |
|
|
(Gains) losses, primarily changes in discount rates, plan design changes, law changes and differences between actual and estimated health care costs |
|
|
645 |
|
|
(574 |
) |
|
Benefits paid |
|
|
(242 |
) |
|
(230 |
) |
|
Business dispositions |
|
|
— |
|
|
(117 |
) |
|
Other, including foreign currency translation |
|
|
(257 |
) |
|
(225 |
) |
|
Projected benefit obligations, December 31 |
|
$ |
8,517 |
|
$ |
7,820 |
|
|
Plan assets at fair value, January 1 |
|
$ |
6,772 |
|
$ |
6,754 |
|
|
Actual |
|
|
631 |
|
|
(56 |
) |
|
Company contributions |
|
|
582 |
|
|
579 |
|
|
Benefits paid |
|
|
(242 |
) |
|
(230 |
) |
|
Business dispositions |
|
|
— |
|
|
(113 |
) |
|
Other, including foreign currency translation |
|
|
(201 |
) |
|
(162 |
) |
|
Plan assets at fair value, December 31 |
|
$ |
7,542 |
|
$ |
6,772 |
|
- Determine the funded status of the pension plan in 2016 and 2015.
- Explain how the funded status affects Abbott’s 2016 balance sheet.
- Describe how service cost affects Abbott Labs’ total pension expense for 2016.
- Explain how benefits paid affect both the pension obligation and the pension assets?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Financial Reporting, Financial Statement Analysis…
Finance
ISBN:
9781285190907
Author:
James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:
Cengage Learning
Financial Reporting, Financial Statement Analysis…
Finance
ISBN:
9781285190907
Author:
James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:
Cengage Learning