Walgreens (USA) is the leading drug store chain in the United States. The company provided the disclosures shown on page 1114 related to its retirement benefits in its 2009 annual report.
The principal retirement plan for employees is the Walgreen Profit-Sharing Retirement Plan, to which both the Company and the employees contribute.
The Company provides certain health insurance benefits for retired employees who meet eligibility requirements, including age, years of service and date of hire. The costs of these benefits are accrued over the period earned. The Company€™s postretirement health benefit plans are not funded.

The discount rate assumption used to compute the postretirement benefit obligation at year-end was 6.15% for 2009 and 7.30% for 2008. The discount rate assumption used to determine net periodic benefit cost was 7.50%, 6.50% and 6.25% for fiscal years ending 2009, 2008 and 2007, respectively.

Instructions
Use the information on Walgreens to respond to the following requirements.
(a) What are the key differences in accounting for pensions under U.S. GAAP and IFRS?
(b) Briefly explain how differences in U.S. GAAP and IFRS for pensions would affect the amounts reported in the financial statements.
(c) In light of the differences identified above, would Walgreens€™ income and equity be higher or lower under U.S. GAAP compared to IFRS standards?Explain.

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Components of net periodic benefit costs (In millions): Funded status (In millions) 2009 2008 2009 2008 Service cost Interest cost Amortization of actuarial loss Amortization of prior service cost Special retirement benefit expense Curtailment income $12 $14 Funded status $(328) $(371) 26 24 Unrecognized actuarial gain 4 5 Unrecognized prior service cost Accrued benefit cost at August 31 $(328) $(371) (6) 4 (16) $24 Total postretirement benefit cost $39 Amounts recognized in the Consolidated Balance Sheets (In millions) 2009 2008 Change in benefit obligation (In millions) Current liabilities (present value 2009 2008 of expected 2010 net benefit $371 $370 payments) $ (11) $ (8) (317) (363) Net liability recognized at August 31 $(328) $(371) Benefit obligation at September 1 Service cost Interest cost Amendments Special termination benefits Acturial (gain)/loss Benefit payments Participants contributions Benefit obligation at August 31 12 26 (106) 4 14 Non-current liabilities 24 31 (29) 3 328 371 Amounts recognized in accumulated other comprehensive loss (In millions) 3 2009 2008 $(141) $(57) Prior service credit Net actuarial loss 104 Change in plan assets (In millions) 2009 2008 Plan assets at fair value at September 1 Plan participants contributions Employer contributions Benefits paid 3 10 Plan assets at fair value at August 31 $