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P10-43. Analyzing and Interpreting Pension Disclosures LO2 E.I. du Pont de Nemours and Co.'s 10-K report has the following disclosures related to its retirement plans (S millions) E.I. du Pont de Nemours and Co. (DD) omewo MBC Obligations and Funded Status December 31, 2015 (S millions) Change in benefit obligation Benefit obligation at beginning of year Service cost Interest cost Plan participants' contributions. Actuarial (gain) loss. Benefits paid. Effect of foreign exchange rates.. Net effects of acquisitions/divestitures Spin-off of Chemours.... $29669 232 1,084 19 (1404) (1761) (456) (52) (1237) Benefit obligation at end of year $26,094 continued Module 10 Leases, Pensions, and Income Taxes 10-54 Obligations and Funded Status December 31, 2015 (S millions) Change in plan assets Fair value of plan assets at beginning of year Actual gain on plan assets.. Employer contributions.... Plan participants' contributions Benefits paid Effect of foreign exchange rates.. . Net effects of acquisitions/divestitures Spin-off of Chemours.... Fair value of plan assets at end of year $20,446 88 308 19 (1761) (330) (47) (1226) $17487 Funded status US. plan with plan assets. . Non-US. plans with plan assets. All other plans Total.. (6,662) (748) (1187) (8,597) Amounts recognized in the Consolidated Balance Sheets consist of Other assets.. 11 Other accrued liabilities.. (130) (8,478) Other liabilities... Net amount recognized (8,597) Components of net periodic benefit cost and amounts recognized in other comprehensive income December 31, 2015 (S millions) Net periodic benefit cost Service cost. Interest cost. Expected return on plan assets... Amortization of loss. $00232 1,084 (1,554) 768 (9) (6) 76 Amortization of prior service (benefit) cost Curtailment (gain) loss Settlement loss.. Net periodic benefit cost-Total. 591 Less: Discontinued operations. (5) Net periodic benefit cost-Continuing operations $00596 Changes in plan assets and benefit obligations recognized in other comprehensive income Net loss (gain) $0057 (768) Amortization of loss. Prior service benefit... Amortization of prior service benefit (cost) Curtailment gain (loss).. Settlement loss Effect of foreign exchange rates..... Spin-off of Chemours.. Total (benefit) loss recognized in other comprehensive income, attributable to DuPont. 9 (76) (119) (382) (1,273) . Total recognized in net periodic benefit cost and other comprehensive income. $(682) 10-55 Module 10 Leases, Pensions, and Income Taxes Weighted-average assumptions used to determ ine net periodic benefit cost for years ended December 31, 2015 Discount rate... 3.93% Expected return on plan assets . Rate of compensation increase. 810% 4.01% The following benefit payments, which reflect future service, as appropriate, are expected to be paid: Pension $ millions Benefits 2016.. $1652 1582 2017 2018 1,585 2019 1593 1600 2020 Years 2021-2025 72 Required a How much pension expense (revenue) does DuPont report in its 2015 income statement? b. DuPont reports a $ 1.554 million expected return on pension plan assets as an offset to 2015 pension expense. Approximately, how is this amount computed (estimate from the numbers reported)? What is DuPont's actual gain or loss realized on its 2015 pension plan assets? What is the purpose of using this expected return instead of the actual gain or loss (retum)? c. What main factors (and dollar amounts) affected DuPont's pension liability during 2015? What main factors (and dollar amounts) affected its pension plan assets during 2015? d What does the tem fanded statues mean? What is the funded status of the 2015 DuPont pensicn plans? e. DuPont decreased its discount rate from 4.55% to 3.93% in 2015. What effectis) does this decrease have on its balance sheet and its income statement? fHow did DuPont's pension plan affect the company's cash flow in 2015? (Identify any inflows and outflows, including amounts.) Explain how the returns on pension assets affect the amount of cash that DuPont must contribute to fund the pension plan P10-43. Analyzing and Interpreting Pension Disclosures LO2 E.I. du Pont de Nemours and Co.'s 10-K report has the following disclosures related to its retirement plans (S millions) E.I. du Pont de Nemours and Co. (DD) omewo MBC Obligations and Funded Status December 31, 2015 (S millions) Change in benefit obligation Benefit obligation at beginning of year Service cost Interest cost Plan participants' contributions. Actuarial (gain) loss. Benefits paid. Effect of foreign exchange rates.. Net effects of acquisitions/divestitures Spin-off of Chemours.... $29669 232 1,084 19 (1404) (1761) (456) (52) (1237) Benefit obligation at end of year $26,094 continued Module 10 Leases, Pensions, and Income Taxes 10-54 Obligations and Funded Status December 31, 2015 (S millions) Change in plan assets Fair value of plan assets at beginning of year Actual gain on plan assets.. Employer contributions.... Plan participants' contributions Benefits paid Effect of foreign exchange rates.. . Net effects of acquisitions/divestitures Spin-off of Chemours.... Fair value of plan assets at end of year $20,446 88 308 19 (1761) (330) (47) (1226) $17487 Funded status US. plan with plan assets. . Non-US. plans with plan assets. All other plans Total.. (6,662) (748) (1187) (8,597) Amounts recognized in the Consolidated Balance Sheets consist of Other assets.. 11 Other accrued liabilities.. (130) (8,478) Other liabilities... Net amount recognized (8,597) Components of net periodic benefit cost and amounts recognized in other comprehensive income December 31, 2015 (S millions) Net periodic benefit cost Service cost. Interest cost. Expected return on plan assets... Amortization of loss. $00232 1,084 (1,554) 768 (9) (6) 76 Amortization of prior service (benefit) cost Curtailment (gain) loss Settlement loss.. Net periodic benefit cost-Total. 591 Less: Discontinued operations. (5) Net periodic benefit cost-Continuing operations $00596 Changes in plan assets and benefit obligations recognized in other comprehensive income Net loss (gain) $0057 (768) Amortization of loss. Prior service benefit... Amortization of prior service benefit (cost) Curtailment gain (loss).. Settlement loss Effect of foreign exchange rates..... Spin-off of Chemours.. Total (benefit) loss recognized in other comprehensive income, attributable to DuPont. 9 (76) (119) (382) (1,273) . Total recognized in net periodic benefit cost and other comprehensive income. $(682) 10-55 Module 10 Leases, Pensions, and Income Taxes Weighted-average assumptions used to determ ine net periodic benefit cost for years ended December 31, 2015 Discount rate... 3.93% Expected return on plan assets . Rate of compensation increase. 810% 4.01% The following benefit payments, which reflect future service, as appropriate, are expected to be paid: Pension $ millions Benefits 2016.. $1652 1582 2017 2018 1,585 2019 1593 1600 2020 Years 2021-2025 72 Required a How much pension expense (revenue) does DuPont report in its 2015 income statement? b. DuPont reports a $ 1.554 million expected return on pension plan assets as an offset to 2015 pension expense. Approximately, how is this amount computed (estimate from the numbers reported)? What is DuPont's actual gain or loss realized on its 2015 pension plan assets? What is the purpose of using this expected return instead of the actual gain or loss (retum)? c. What main factors (and dollar amounts) affected DuPont's pension liability during 2015? What main factors (and dollar amounts) affected its pension plan assets during 2015? d What does the tem fanded statues mean? What is the funded status of the 2015 DuPont pensicn plans? e. DuPont decreased its discount rate from 4.55% to 3.93% in 2015. What effectis) does this decrease have on its balance sheet and its income statement? fHow did DuPont's pension plan affect the company's cash flow in 2015? (Identify any inflows and outflows, including amounts.) Explain how the returns on pension assets affect the amount of cash that DuPont must contribute to fund the pension plan

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