An adjustment to Kensington’s statement of cash flows to reclassify the company’s excess contribution for 2010 would most likely entail reclassifying £210 million (excluding income tax effects) as an outflow related to:

A. investing activities rather than operating activities.

B. financing activities rather than operating activities.

C. operating activities rather than financing activities.

Kensington plc, a hypothetical company based in the United Kingdom, offers its employees a defined benefit pension plan. Kensington complies with IFRS. The assumed discount rate that the company used in estimating the present value of its pension obligations was 5.48 percent. Information on Kensington’s retirement plans is presented in Exhibit 1.

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EXHIBIT 1 Kensington plc Defined Benefit Pension Plan (in millions) 2010 Components of periodic benefit cost Service cost Net interest (income) expense Remeasurements Periodic pension cost Change in benefit obligation Benefit obligations at beginning of year Service cost Interest cost Benefits paid Actuarial gain or loss Benefit obligations at end of year Change in plan assets Fair value of plan assets at beginning of year Actual return on plan assets Employer contributions Benefits paid Fair value of plan assets at end of year Funded status at beginning of year Funded status at end of year 228 273 -18 483 28,416 228 1,557 -1,322 0 28,879 23,432 1,302 693 -1,322 24,105 -4,984 -4,774