- CFA Exams
- CFA Level I Exam
- Topic 3. Financial Statement Analysis
- Learning Module 12. Employee Compensation: Post-Employment and Share-Based
- Subject 3. Analysis of Pension Plan Disclosures
CFA Practice Question
Information regarding the defined-benefit pension plan of Glavin Industries included the following for 2011 ($ in millions):
Retiree benefits paid (end of year): 150.
Actual return on plan assets: 30.
Employer contributions to the pension plan (end of year): 126.
Expected rate of return on plan assets: 10%.
Plan assets, Jan. 1: 210.
Retiree benefits paid (end of year): 150.
Actual return on plan assets: 30.
Employer contributions to the pension plan (end of year): 126.
Expected rate of return on plan assets: 10%.
What amount should Glavin report in its disclosure notes for plan assets at December 31, 2011?
A. $207 million.
B. $216 million.
C. $516 million.
Explanation: Beginning balance ($210) + actual return ($30) + contributions ($126) - retiree benefits paid ($150) = ending balance (?) [in millions].
User Contributed Comments 5
| User | Comment |
|---|---|
| danlan2 | 10% is ignored, since we have actual return on plan assets. |
| ThePessimist | Don't confuse the expected return used in calculating pension expense with the actual return used in calculating plan assets. Note that the difference will become part of the unrecognized net gain and backed out for determining the funded status shown on the balance sheet. |
| yxten1 | so expected return is for pension expense but actual return is for plan assets? |
| uviolet | keeps all the e's (expense & expected return) together and a's (asset & actual return) together |
| jpducros | good one uviolet ! |