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Basic Question 15 of 24
Information regarding the defined-benefit pension plan of Melrose Products included the following for 2011 ($ in millions):
Plan assets, Dec. 31: 525.
Retiree benefits paid (end of year): 85.
Return on plan assets: 50.
B. $210 million.
C. $225 million.
Plan assets, Jan. 1: 350.
Plan assets, Dec. 31: 525.
Retiree benefits paid (end of year): 85.
Return on plan assets: 50.
What were the employer contributions to the pension plan at the end of 2011?
A. $175 million.
B. $210 million.
C. $225 million.
User Contributed Comments 3
| User | Comment |
|---|---|
| cfajunkie | I thought actual returns were subtracted? |
| Dalila | Actual return is the return from the plan asset. Actual returns is subtracted from pension expense. In this question they are referring to plan assets, therefore the you need to ADD it because the return increases the value of the plan assets |
| sogah | Thanks Dalila |
I used your notes and passed ... highly recommended!
Lauren
Learning Outcome Statements
explain and calculate measures of a defined benefit pension obligation (i.e., present value of the defined benefit obligation and projected benefit obligation) and net pension liability (or asset);
describe the components of a company's defined benefit pension costs;
explain and calculate the effect of a defined benefit plan's assumptions on the defined benefit obligation and periodic pension cost;
CFA® 2025 Level II Curriculum, Volume 2, Module 11.