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Financial Reporting and Analysis 6e Pensions and Postretirement Benefits

CHAPTER 14

PENSIONS AND POSTRETIREMENT BENEFITS

CHAPTER OVERVIEW

Pension plan contracts allow employees to exchange current service for payments to be received

during retirement. Defined contribution pension plans specify amounts to be invested for the employee

during the employee’s career, and the employee’s pension will be based on the value of those

investments at retirement. In the United States, most new pension plans are defined contribution pans.

Consequently, defined contribution pension plans now hold 30% more assets than do defined benefit

plans. Still, U.S. defined benefit pension plans hold approximately $2 trillion in assets.

The accounting for defined contribution plans is straightforward. Defined benefit pension plans

specify amounts to be received during retirement, thereby complicating the underlying economics of the

exchange and the accounting. Under ASC Topic 715, pension expense for defined benefit pension

plans consists of service cost, interest cost, expected return on pan assets, and two other “smoothing”

components. The two smoothing mechanisms avoid year-to–year volatility in pension expense but

make pension accounting exceedingly complex because many pension-related items are presented in

AOCI.

Under pre-Codification SFAS No. 87, the balance sheet asset (liability) on the balance sheet differed

from the pan’s actual funded status. Current GAAP requires that the balance sheet asset (liability) equal

the plan’s funded status. Employer funding of defined benefit pension plans is influenced by tax law,

labor law, union membership, and the employer’s financial needs.

The reporting rules for other postretirement benefits (OPEB) closely parallel the pension accounting

rules. GAAP requires information about expected future cash flows, future amortization amounts, and

major classes of investments so that investors can make cash flow projections, assess risk, and evaluate

rate of return assumptions.

Academic research suggests that stock prices reflect pension and OPEB disclosures but their impact

may not be fully valued. Statement readers should watch for potential warning signals or indicators of

earnings management. Such indicators may include (1) a significant disagreement between any of the

various pension and OPEB rates selected by a firm; (2) a very large difference between the chosen

expected rate of return on plan assets and the discount rate used; (3) an increase in the year–to-year

expected rate of return on plan assets that seems unrelated to changes in market conditions, etc; (4) a

decrease in the assumed rate of increase in future compensation levels (or, for OPEB, future health cost

trends) that cannot be explained by changing industry or labor market conditions; (5) rate of return

assumptions that are inconsistent with prior investment experience or mix of equity and debt

investments.

IAS 19 (revised 2011) offers guidance that is markedly different from U.S. GAAP. Among other

things, it requires that the discount rate be used to measure both the expected return on assets and the

interest cost on PBO to obtain a net financing component. Additionally, actuarial losses (gains)

recognized in OCI are not subsequently amortized into pension expense. It also requires new past

service cost to be recognized immediately as a component of pension expense.

CHAPTER OUTLINE

I. RIGHTS AND OBLIGATIONS IN PENSION CONTRACTS

A. A pension plan is an agreement by an organization (sponsor) to provide payments—called a

pension—to employees when they retire either in a series of payments (annuity) or as a one-

time “lump sum” distribution.

Financial Reporting and Analysis 6e Pensions and Postretirement Benefits

1. Defined contribution plans specify the amount of cash that the employer puts into the

plan for the benefit of the employee.

a. No explicit promise is made about the size of the periodic payments the employee

will receive on retirement.

b. The amount that will ultimately be paid out to the employee is determined by the

accumulated value at retirement of the amounts contributed to the plan over the

period of employment.

c. Therefore, the employee bears the risk of the ultimate pension payments being large

enough to sustain a comfortable retirement income.

d. Money purchase plan, profit sharing, and 401(k) are common types of plans.

2. A defined benefit plan specifies the formula for determining the amount that will be paid

out to the employee after retirement rather than the amount that will be put into the plan.

a. The annual pension benefit typically depends on years of service with the firm and

salary.

b. The employee bears the risk that a firm will go bankrupt and default on unfunded

pension liabilities.

c. A plan is fully funded if its assets equal its liabilities.

II. ACCOUNTING ISSUES RELATED TO DEFINED BENEFIT PENSION PLANS

A. In a defined contribution plan, pension expense in any period is equal to the amount of

cash contributed to the plan by the employer.

1. Upon retirement, individual employees receive their share of the accumulated

balance from the investments.

B. In a defined benefit plan, the main complication is how much should be charged to

pension expense in each year during which employees covered under the plan work.

1. This complication arises because only the benefits formula is specified, not the

benefits amount.

2. To determine what the periodic pension expense should be over the span of the

employees’ working careers, the following factors must be estimated;

a. What proportion of the workforce will remain with the company long enough to

qualify for benefits—called vesting—under the plan?

b. At what rate will salaries rise over the period until eventual retirement?

c. What is the anticipated life span of covered employees after retirement?

d. What is the appropriate discount rate that should be used to reflect the present

value of the future benefits earned by employees in the current period?

e. What do firms do when actual experience is different from expectations?

3 In December 1985, the FASB issued specific measurement and disclosure

requirements for defined benefit pension plans which were later amended in 1998

2003, and 2006. Current GAAP is found in FASB ASC Topic 715,

Compensation – Retirement Benefits. Pension expense measurement for financial

reporting includes several smoothing features to avoid volatility in pension

expense.

a. These features acknowledge that short-term gains and losses on pension assets

and obligations may not result in cash inflows or outflows and are therefore omitted

from pension expense but have been included in footnotes between 1986 to 2006.

b. Since 2006, the temporary gains and losses have been recognized in

accumulated other comprehensive income (AOCI) with a corresponding offset to

a balance sheet pension asset or liability account.

c. Due to the existing complexity in the financial reporting, the FASB still views

the current GAAP as an interim measure and continues to study pension measurement

and presentation issues.

Financial Reporting and Analysis 6e Pensions and Postretirement Benefits

III. FINANCIAL REPORTING FOR DEFINED BENEFIT PENSION PLANS

A. Pension expense (in a defined benefit plan) is comprised of five separate components (a +

indicates increase in expense and a – indicates decrease in expense).

1. Service cost (+).

2. Interest cost (+).

3. Expected return on the market related value of pension plan assets (–).

4. Recognized gains or losses (+ or –).

5. Recognized prior service cost (+ or –).

B. A Simple Example: A World of Complete Certainty

1. Component 1 (service cost):

a. Service cost is the increase in the discounted present value of the pension benefits

ultimately payable that is attributable to an additional year’s employment.

i. In a typical defined benefit pension plan, the pension pay-out increases for each

additional year of service.

ii. This increase in the expected pay-out results in an increase in the discounted

present value of the liability.

iii. This increase is service cost.

b. In the example in the text, service cost is $24,526 in 2014 and $26,243 in 2015.

c. The gross assets and projected benefit obligation (PBO) of the pension plan do not

appear on the balance sheet but rather the company recognizes the funded status (the

net difference of the fair value of plan assets and the PBO) through its pension

expense and plan contribution (funding) journal entries.

2. Component 2 (interest cost):

a. The interest cost component of pension expense (and the increase in the liability)

arises due to the passage of time for unpaid PBO.

i. In contrast, the service cost element arises because the pension liability grows

as workers accumulate additional years of service.

ii. Because the payment of the pension liability draws closer as each year passes,

its present value increases.

iii. Interest cost is computed by taking the pension liability at the beginning of the

period and multiplying it by the discount rate.

b. In the example in the text, the interest cost for 2015 ($1,717) equals the pension

liability at the beginning of 2015 ($24,526) multiplied by the interest rate factor (7%).

c. There was no interest cost in 2014 since the liability did not arise until December 31,

2014 after the employee’s completion of a year of service.

3. Component 3 (expected return on plan assets):

a. The expected return on plan assets increases plan assets and decreases pension

expense.

b. In a world of certainty, the expected return and actual return on plan assets are equal.

The rules allow for a “smoothing” of this difference over several years.

c. Pension cost equals service cost when there is complete certainty because interest

cost is exactly offset by the return on plan assets. In other words, the return on plan

assets offsets increases to PBO created by the service cost and interest cost

components. Depending on the age distribution of the workforce, interest cost instead

of service cost could be the dominant part of pension expense.

C. The Real World: Uncertainty Introduces Gains and Losses

1. Uncertainty requires estimates of future discount rates, the expected return on plan assets,

and numerous other future events like employee turnover and longevity beyond retirement.

a. GAAP requires that the same rate be used to compute both the service cost and the

interest cost components of pension expense.

Financial Reporting and Analysis 6e Pensions and Postretirement Benefits

i. The higher the discount rate initially chosen for computing service cost, the

lower the reported service cost component of pension expense. Conversely,

the higher the expected rate of return used, the higher the deducted expected

return component of the pension expense.

ii. This reduction in service cost is partially offset by an increase in the interest cost

component of pension expense, which is due to the higher interest rate.

b. GAAP provides explicit criteria for estimating discount rates. This criteria

reduces (but does not eliminate it) managers’ ability to manipulate its pension

expense and its projected benefit obligation.

i. GAAP states that “assumed discount rates shall reflect the rates at which the

pension benefits could effectively be settled” (FASB ASC 715-30–35–43).

ii. To obtain this discount rate, firms can look to prevailing rates of return on high–

quality debt instruments with maturities that match expected payouts to retirees.

iii. Recent decline in rates coupled with low asset returns have led to significant

underfunding in both private and government pension plans.

2. Uncertainty also means that realizations will likely differ from expectations.

a. These deviations between actual and expected events would inject volatility in

periodic pension expense if recognized immediately.

b. Components 4 and 5 are designed to smooth these variances over future periods.

E. Components 4 and 5 are smoothing devices:

1. Component 4 (Recognized Gains or Losses):

a. In an uncertain environment, the actual return on pension plan assets can differ from

the expected return in any year.

b. Volatility in year-to-year pension expense can be avoided because firms can reduce

pension expense by the expected return on plan assets rather than by the actual

return.

c. This result is accomplished using a two-stage process:

i. First, firms select a target long-term rate of return that they expect to earn on

plan assets (rate of return assumption).

ii. Second, any difference between this expected return and the actual return that is

earned in a given year is recognized in other comprehensive income instead of

pension expense.

d. The difference between the expected and actual return in each year is recognized in

other comprehensive income instead of pension expense and called the unrecognized

gain or loss.

e. Since managers select the rate for computing the expected return on plan assets, it is

possible to lower pension expense in the short-run by using an expected asset return

rate that is higher than the discount rate.

f. If the gains and losses do not offset one another over time, the cumulative deferred

amounts continue to grow.

i. This cumulative gain or loss amount is amortized over current and future years

and recognized as a component of pension expense if it exceeds a certain maturity

threshold called a “corridor.”

ii. This threshold is defined as 10% of the larger of the following two numbers

measured at the beginning of the period:

1. The present value of pension obligations (PBO) based on assumed

future compensation levels (called the projected benefit obligations), or

2. The market–related value (MRV) of pension plan assets.

iii. If the 10% threshold is exceeded, the excess cumulative gain or loss is

amortized straight-line over the estimated remaining service period of active

employees.

1. The amortization of excess cumulative gains reduces pension expense.

Financial Reporting and Analysis 6e Pensions and Postretirement Benefits

2. The amortization of excess cumulative losses increases pension expense.

2. Component 5 (Recognized Prior Service Cost):

a. The dollar amount of the increase in the projected benefit obligation due to plan

enhancements is called prior service cost.

i. When a firm retroactively enhances (reduces) the benefits provided by its

pension plan, past pension expense and funding were too low (high).

ii. The pension benefit obligation under the enhanced (reduced) plan immediately

increases (decreases).

b. When this amendment is made, the effect is initially deferred in OCI and amortized

from AOCI to pension expense component 5 (prior service cost) over future years.

b. Prior service costs are then amortized into pension expense on a straight-line basis over

the expected service lives of employees who are expected to receive benefits under

the plan.

c. Similar to net actuarial losses, new prior service costs increase balance sheet liabilities

and decrease OCI and AOCI.

d. Journal Entries for Changes in Funded Status – Follow example in text

F. Determinants of Pension Funding – The U.S. Congress enacted the Employees Retirement

Income Security Act (ERISA) in order to protect workers covered by company sponsored

pension plans.

1. ERISA introduced minimum funding requirements and limited investments in employer

stock to 10% of plan assets, and created the Pension Benefit Guaranty Corporation

(PBGC) to assume pension obligations in case of company bankruptcy.

2. U.S. income tax law has influence on pension plan funding since contributions are tax

deductible and plan earnings are nontaxable to the plan sponsor.

3 A pension plan sponsor is obliged to fund the annual service cost computed under the plan.

4. There is a tax incentive to overfund pension plans since plan contributions are tax

deductible and plan earnings are nontaxable to the plan sponsor.

a. Tax law limits the deducibility of contributions to overfunded plans.

b. Consequently firms with overfunded plans limit subsequent funding to that amount

which is deductible for tax purposes.

5. Firms sometimes reduce or even forgo funding of the current period’s pension expense

(subject to minimum funding guidelines) to meet competing investment or financing cash

needs.

6. Research suggests that tax incentives, finance incentives, labor incentives, and

contracting/political cost incentives affect a firm’s pension funding strategy.

a. Firms with high marginal tax rates tend to have higher funding ratios.

b. Firms with less stringent capital constraints and larger union membership tend to have

higher funding ratios.

c. Firms with more “precarious” debt/equity ratios (that is, firms close to violating debt

covenant restrictions) tend to fund a lower proportion of their pension obligations.

IV. CASE STUDY OF PENSION RECOGNITION AND DISCLOSURE – GENERAL

ELECTRIC – [The use of the case in the text would be a great idea since it is a comprehensive one.

Figures 14.6, 14.7, and 14.8 are extremely useful in summarizing the transactions affecting those

accounts] Be sure to cover the subtle elements in the following subtopics:

1. Accumulated Other Comprehensive Income Disclosure and Deferred Income Taxes

2. Additional Issues in Computing Expected Return

3. Extraction of Additional Analytic Insights from Note Disclosures

Important Section Highlights:

A. A company’s pension disclosures provide information about the current economic status of

its pension plans. This provides insights regarding expected future pension-related cash

flows and their potential effect on firm cash flows.

Financial Reporting and Analysis 6e Pensions and Postretirement Benefits

B. The funded status and the PBO can be used to assess defined benefit pension risk for the

firm.

C. Underfunded pension plans represent a potential drain on future cash flows and should be

viewed as unsecured debt.

V. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

A. The computations for postretirement benefits expense and measures of the liability generally

parallel the format for pension expense and liability.

1. When OPEB plans are funded, postretirement benefit expense is reduced by the expected

return on plan assets.

a. To accomplish this, asset gains and losses are excluded from current expense but

recognized as a component of OCI.

b. These gains and losses are accumulated and amortized as component 4 of pension

expense if they exceed a 10% corridor.

2. A counterpart to pension component 5—amortization of prior service costs—exists as

well in instances in which firms enhance or reduce the level of postretirement benefits.

B. One difference between the accounting for pensions and the accounting for postretirement

benefits is that postretirement benefits are rarely tied to salary at retirement.

1. Consequently, there is no projected benefit obligation calculation.

2. The liability attributable to service date is called the accumulated post-retirement benefit

obligation (APBO).

a. The typical plan promises employees full coverage after a certain period of

employment.

b. The actuarially determined service cost of the plan is accrued over the same

attribution period.

C. Analytical Insights: Assessing OPEB Liability – Like for pensions, the OPEB liability

is riskier than many traditional forms of debt. Two ratios used in assessing the magnitude of

risk are:

1. Short-term OPEB risk ratio (quick version): APBO – Plan Assets/Market Value of CS

or for an extended version the numerator is: 5 yrs of Expected Benefit payment – Plan

Assets

2. Long-term OPEB risk ratio: APBO/Market Value of Common Stock

D. Most of the companies with the highest OPEB risk ratios declared bankruptcy.

E. Statement readers must be mindful that the future cash outflows associated with these

plans could be much higher than the current cash outflows.

F. Evaluation of Pension and Postretirement Benefit Financial Reporting

G. Recognition calculations for pensions and OPEB are extremely complex, and net income does

not reflect immediately actual asset returns or PBO effects as they arise.

H. Current GAAP requires the funded status of pension and postretirement plans be disclosed as

an asset or liability on the firm’s balance sheet.

I Some analysts argue that only service cost should be charged to operating income.

1. They believe interest cost (Component 2) is a financing cost.

2. The expected return (Component 3) — which lowers pension expense—should be

shown in other income.

VI. GLOBAL VANTAGE POINT: Comparison of IFRS and GAAP Retirement Benefit

Accounting

IFRS for pensions are specified by IAS 19 – “Employee Benefits.” Many of the requirements are

similar to the provisions in FASB ASC Subtopic 715-30: Compensation – Retirement Benefits –

Defined Benefit Plans – Pension.

A. However, important differences remain:

1. Prior service cost related to vested employees is recognized immediately as part of

Financial Reporting and Analysis 6e Pensions and Postretirement Benefits

pension expense, while prior service cost related to nonvested employees is amortized

over the average remaining vesting period. GAAP, on the other hand, requires firms to

recognize new prior service costs as part of OCI ad recycles them to pension expense

over the shorter of the average remaining work life or the period covered under a collect

bargaining agreement.

2. IAS 19 requires that the discount rate be used to compute the expected return on plan

assets. Actuarial gains and losses on the PBO and the actual return (less the expected

return on plan assets) are recognized in OCI without subsequent amortization to

pension expense. That means the periodic pension expense computed under IFRS

consists only of current service cost, past service cost, and net interest on the net defined

benefit liability or asset (funded status).

3. Placement on the statement of comprehensive income: Service cost is part of operating

activities while the finance component is part of the finance costs within profit and loss,

and actuarial gains and losses (remeasurement component) is part of OCI.

4. Balance sheet pension asset cannot exceed the asset ceiling which is the sum of (1) the

net plan assets available from refunds or reduced plan contributions, (2) the

unrecognized prior service costs, and (3) the unrecognized net actuarial losses.

5. Because FASB has not yet changed U.S. GAAP for pensions, pension expense is likely

more volatile under U.S. GAAP since it requires firms to amortize actuarial gains and

losses.

6. U.S. GAAP pension is likely to be lower because it allows the expected rate of return to

exceed the discount rate.

Financial Reporting and Analysis 6e Pensions and Postretirement Benefits

CHAPTER QUIZ

1. The projected benefit obligation is best described as the:

a. Present value of benefits accrued to date based on future salary levels.

b. Present value of benefits accrued to date based on current salary levels.

c. Increase in retroactive benefits at the date of the amendment of the plan.

d. Amount of the adjustment necessary to reflect the difference between actual and estimated

actuarial returns.

2. Which of the following describes a fundamental aspect of pension accounting?

a. Changes in pension assets and obligations are recognized immediately.

b. The amount of pension benefits is not precisely determinable.

c. Net periodic pension expense may be reported within maximum and minimum limits.

d. When underfunding occurs, immediate recognition in the balance sheet and income statement

is required.

3. Effective January 1, 2015, Visor Co. established a defined benefit pension plan with no retroactive

benefits. The first of the required equal annual contributions was paid on December 31, 2015. A

10% discount rate was used to calculate service cost, and a 10% rate of return was assumed for plan

assets. All information on covered employees for 2015 and 2016 is the same. How should the

service cost for 2016 compare with 2015, and should the 2015 balance sheet report an accrued or a

prepaid pension cost?

Service Cost Pension Cost Reported

For 2016 on the 2015

Compared to 2008 Balance Sheet

a. Equal to Accrued

b. Equal to Prepaid

c. Greater than Accrued

d. Greater than Prepaid

4. The following information pertains to Seda Co.’s pension plan:

Actuarial estimate of projected benefit obligation at 1/1/15 $72,000

Assumed discount rate 10%

Service cost for 2015 $18,000

Pension benefits paid during 2015 $ 15,000

If no change in actuarial estimates occurred during 2015, Seda’s projected benefit obligation at

December 31, 2015 is:

a. $64,200.

b. $75,000.

c. $79,200.

d. $82,200.

5. The following information pertains to Gali Co.’s defined benefit pension plan for 2015:

Fair value of plan assets, beginning of year $3 50,000

Fair value of plan assets, end of year $525,000

Employer contributions $ 110,000

Benefits paid $85,000

In computing pension expense, what amount should Gali use as an actual return on plan assets?

a. $65,000.

b. $150,000.

c. $175,000.

Financial Reporting and Analysis 6e Pensions and Postretirement Benefits

d. $260,000.

6. The following information pertains to the 2015 activity of the defined benefit pension plan of Twain

publishers, Inc.

Service cost $120,000

Return on plan assets $30,000

Interest cost on pension benefit obligation $40,000

Amortization of actuarial loss $ 10,000

Amortization of prior service cost $5,000

Twain’s 2015 pension cost is:

a. $105,000.

b. $125,000.

c. $135,000.

d. $145,000.

7. The following information pertains to Kane Co.’s defined benefit pension plan:

Prepaid pension cost, beginning of year $ 2,000

Service cost $19,000

Interest cost $38,000

Actual return on plan assets $22,000

Amortization of unrecognized prior service cost $52,000

Employer contributions $40,000

The fair value of plan assets exceeds the accumulated benefit obligation. In its end-of–year financial

statements, what amount should Kane report as unfunded accrued pension cost?

a. $45,000.

b. $49,000.

c. $67,000.

d. $87,000.

8. The gain or loss components of net periodic postretirement benefit cost (FASB ASC 715) and net

periodic pension expense are calculated similarly. Moreover, under either pronouncement, an

employer may use a systematic method of amortizing unrecognized net gain or loss other than the

corridor approach. The alternative is allowable if it results in amortization at least equal to the

minimum determined using that approach. Under FASB ASC 715, however, if an enterprise

consistently recognizes gains and losses immediately,

a. Any net loss in excess of a net gain previously recognized first offsets any unrecognized prior

service cost.

b. Any net gain in excess of a net loss previously recognized first offsets any unrecognized

transition asset.

c. Any net loss in excess of a net gain previously recognized first offsets any unrecognized

transition obligation.

d. Any net gain in excess of a net loss previously recognized first offsets any unrecognized

transition obligation.

9 An employer maintains a postretirement health care plan for employees. Under the plan’s terms, an

excess of benefit payments over the sum of the employer’s cost and the employees’ contributions

for a year will be recovered from increased employees’ contributions in the subsequent year.

However, for the current year only, the employer has decided not to adjust contributions. The

employer should:

Financial Reporting and Analysis 6e Pensions and Postretirement Benefits

a. Delay recognition of the loss by using the corridor approach.

b. Apply any systematic and rational delayed recognition approach to accounting for the loss.

c. Immediately recognize the loss in income.

d. Adjust the transition asset.

10. A company provides postretirement health care benefits to employees who have completed at least

10 years of service and are aged 55 years or older when retiring. Employees retiring from this

employer have a median age of 62, and no one has worked beyond age 65. An employee is hired at

the age of 48. The attribution period for accruing the employer’s health care benefit obligation to

the employee is during the period when the employee is aged:

a. 48 to 65.

b. 48 to 58.

c. 55 to 65.

d. 55 to 62.

Financial Reporting and Analysis 6e Pensions and Postretirement Benefits

QUIZ ANSWERS:

1. a. The projected benefit obligation is equal to the actuarial present value of all of the benefits

attributed by the pension benefit formula to employee service rendered prior to the date of

measurement. The projected benefit obligation is measured using assumptions as to future salary

levels.

Financial Reporting and Analysis 6e Pensions and Postretirement Benefits

McGraw-Hill Education.

recognized.

8. d. Under either pronouncement, gains and losses may be recognized immediately or delayed.

However, FASB ASC 715 also provides that immediately recognized gains (losses) that do not

offset previously recognized losses (gains) must first reduce any transition obligation (asset). The

transition obligation (asset) represents an underlying unfunded (overfunded) accumulated post-

retirement benefit obligation. The FASB believes that gains (losses) should not be recognized until

the unfunded (overfunded) accumulated postretirement benefit obligation is recognized.

9. c. A gain or loss from a temporary deviation from the substantive plan is immediately recognized in

income. No delayed recognition method is appropriate because the effect of a temporary deviation

is not deemed to provide future economic benefits and relates to benefits already paid. If the

deviation is other than temporary, the implication is that the substantive plan has been amended. An

amendment would require accounting for prior service cost.

10. b. The attribution period begins on the date of hire unless the plan’s benefit formula grants credit

for service only from a later date. The end of the period is the full eligibility date. If the exception

does not apply, the employee’s attribution is from age 48, the date of hire, to age 58, the date of full

eligibility.

RECOMMENDED EXHIBITS

Figure 14.1- Pension Plan Entities and Relationships

Figure 14.2—Assets By Plan Type

Figure 14.3—Pension Discount Rate and Expected Long-Term Rate of Return on Plan

Figure 14.5—Computing Component 4 – Recognized Gains or Losses.

Figure 14.6—Causes of Increases and Decreases in Plan Assets

Figure 14.7—Causes of Increases and Decreases in PBO

Figure 14.8 – Analysis of Balance Sheet Liability and OCI Accounts

Exhibit 14.1 – Present Value Calculations for Robie Corporation Pension Plan