Below is an excerpt from the note disclosure (excerpts from Note 12) of the Canadian National Railway Company€™s December 31, 2008 annual report.

Instructions
Using the above disclosure notes, answer the following questions.
(a) Is the company€™s pension plan in a surplus or deficit status position at December 31, 2008? 2007?
(b) What is the amount reported for the pension expense for December 31, 2008, and 2007? What could cause these trends?
(c) What was the amount of cash flow used to fund the plan for 2008 and 2007? Why would there be differences in the annual funding amounts? How does this compare with the expense that is showing for the company for the related years?
(d) Discuss whether or not you believe that the pension expense is faithfully presented in the profit or loss statement for the years 2008 and 2007.

Pensions n millions ear ended December 31 2008 2007 2006 $ 136 $150 $146 Service cost Interest cost Curtailment gain Expected return on plan assets Amortization of prior service cost Recognized net actuarial loss (gain) 713 (1,004) (935 (903) 91 $ (48)29 66 801 742 19 53 Net periodic benefit cost (income) (i)Obligations and funded status Pensions n millions Year ended December 31 2008 2007 Change in benefit obligation Benefit obligation at beginning of year Amendments Adoption of SFAS No. 158 $14,419 $14,545 measurement date provision (Note 2) Interest cost Actuarial gain Service cost Curtailment gain Plan participants' contributions Foreign currency changes Benefit payments and transfers 801 (2,274) 136 742 (195) 150 52 45 (853) 54. (33) (847) Benefit obligation at end of year $12,326$14,419 (618) $11,929 $13,801 Component representing future salary increases (397) Accumulated benefit obligation at end of year Change in plan assets Fair value of plan assets at beginning of year Employer contributions Plan participants' contributions Foreign currency changes Actual return on plan assets Benefit payments and transfers $16,000 127 52 27 (1,742) (853) $15,625 75 (26) 1,119 (847) Fair value of plan assets at end of year $13,611$16,000 Funded (unfunded) status (Excess of fair value of plan assets over benefit obligation at end of year) $1,285 $1,581 Measurement date for all plans is December 31