Arca Ltd., a public company, has a defined benefit obligation. From their financial statements, you have determined that the pension obligation recognized in the financial statements has a discount rate of 6.0%; the net defined benefit obligation is $90 million; and the total pension expense was $6.9 million. The following sensitivity analysis was presented in their annual MD&A:

Required:
Prepare a discussion that interprets and explains the information provided in the chart. Using the information presented, explain how changes to the discount rate impact the accounting for the pension plan.

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(300.0) (200.0) (100.0) 5.25% 5.50% 6.25% 6.50% 100.0 6.50% Impact on net defined benefit liability ($millions) (254.0) Impact on pension expense ($millions) (5.2) 200.0 6.25% (190.0) (1.4) 300.0 5.50% 125.0 4.5 400.0 5.25% 298.0 10.3 Arca Ltd. Sensitivity: Discount Rate The above sensitivity analysis is performed on the defined benefit obligation. The analysis demonstrates the impact on it, while holding all other assumptions constant.