L. Calculate the combined retirement and other benefits expense over the past three years. (See page 61).
Fantastic news! We've Found the answer you've been seeking!
Question:
L. Calculate the combined retirement and other benefits expense over the past three years. (See page 61).
i. What general trend do you notice? Do you consider this trend persistent? That is, do you expect it to continue?
ii. Retirement and other benefits expense includes an operating component and a non-operating component. Calculate both components for each of the three years. What trends do you notice in the components? Do you consider these trends persistent?
Transcribed Image Text:
Net periodic benefit costs for the Company's defined benefit retirement plans and other benefit plans for 2007, 2006 and 2005 include the following components: (Dollars in Millions) Service cost Interest cost Expected return on plan assets Amortization of prior service cost Amortization of net transition asset Recognized actuarial losses Curtailments and settlements Net periodic benefit cost (Dollars in Millions) U.S. Benefit Plans Discount rate Expected long-term rate of return on plan assets Rate of increase in compensation levels International Benefit Plans Discount rate Expected long-term rate of return on plan assets Rate of increase in compensation levels 2007 $ 597 656 (809) 10 1 186 5 $ 646 The Company's discount rates are determined by considering current yield curves representing high quality, long-term fixed income instru- ments. The resulting discount rates are consistent with the duration of plan liabilities. The expected long-term rate of return on plan assets assumption is determined using a building block approach, con- sidering historical averages and real returns of each asset class. In certain countries, where historical returns are not meaningful, consideration is given to local market expectations of long-term returns. Retirement Plans 2006 6.50% 552 570 (701) 10 9.00 4.50 5.50% (1) 8.25 4.00 251 4 685 (Dollars in Millions) Amortization of net transition obligation Amortization of net actuarial losses Amortization of prior service cost 6.00 9.00 4.50 MOTOR 2005 462 488 (579) 12 5.00 The net periodic benefit cost attributable to U.S. retirement plans was $379 million in 2007, $423 million in 2006 and $370 million in 2005. Amounts expected to be recognized in net periodic benefit cost in the coming year for the Company's defined benefit retirement plans and other postretirement plans: 8.00 3.75 (2) Retirement Plans 2007 2006 2005 2007 SAN (Dollars in Maillons) Health Care Plans The weighted-average assumptions in the following table represent the rates used to develop the actuarial present value of projected benefit obligation for the year listed and also the net periodic benefit cost for the following year. 2007 $140 149 219 2 602 $346 5.75 (2) (7) - 66 Total interest and service cost Postretirement benefit obligation Other Benefit Plans 2006 122 136 6.50% 9.00 9.00 4.50 4.50 Health Care Plans Health care cost trend rate assumed for next year Rate to which the cost trend rate is assumed to decline (ultimate trend) Year the rate reaches the ultimate trend rate 4.75 6.50% 8.25 3.75 4.50 (3) (7) 74 322 Other Benefit Plans 2006 6.00 9.00 4.50 6.00 4.50 - 2007 9.00% 2005 56 87 5.00% 2014 One Percentage Point Increase (3) (7) . $35 320 25 158 $2 132 5 The following table displays the assumed health care cost trend rates, for all individuals: 2005 5.75 9.00 4.50 A one-percentage-point change in assured health care cost trend rates would have the following effect: 5.00 4.25 2006 9.00 4.50 2012 Dne-Percentage- Point Decrease $ (27) (259) Net periodic benefit costs for the Company's defined benefit retirement plans and other benefit plans for 2007, 2006 and 2005 include the following components: (Dollars in Millions) Service cost Interest cost Expected return on plan assets Amortization of prior service cost Amortization of net transition asset Recognized actuarial losses Curtailments and settlements Net periodic benefit cost (Dollars in Millions) U.S. Benefit Plans Discount rate Expected long-term rate of return on plan assets Rate of increase in compensation levels International Benefit Plans Discount rate Expected long-term rate of return on plan assets Rate of increase in compensation levels 2007 $ 597 656 (809) 10 1 186 5 $ 646 The Company's discount rates are determined by considering current yield curves representing high quality, long-term fixed income instru- ments. The resulting discount rates are consistent with the duration of plan liabilities. The expected long-term rate of return on plan assets assumption is determined using a building block approach, con- sidering historical averages and real returns of each asset class. In certain countries, where historical returns are not meaningful, consideration is given to local market expectations of long-term returns. Retirement Plans 2006 6.50% 552 570 (701) 10 9.00 4.50 5.50% (1) 8.25 4.00 251 4 685 (Dollars in Millions) Amortization of net transition obligation Amortization of net actuarial losses Amortization of prior service cost 6.00 9.00 4.50 MOTOR 2005 462 488 (579) 12 5.00 The net periodic benefit cost attributable to U.S. retirement plans was $379 million in 2007, $423 million in 2006 and $370 million in 2005. Amounts expected to be recognized in net periodic benefit cost in the coming year for the Company's defined benefit retirement plans and other postretirement plans: 8.00 3.75 (2) Retirement Plans 2007 2006 2005 2007 SAN (Dollars in Maillons) Health Care Plans The weighted-average assumptions in the following table represent the rates used to develop the actuarial present value of projected benefit obligation for the year listed and also the net periodic benefit cost for the following year. 2007 $140 149 219 2 602 $346 5.75 (2) (7) - 66 Total interest and service cost Postretirement benefit obligation Other Benefit Plans 2006 122 136 6.50% 9.00 9.00 4.50 4.50 Health Care Plans Health care cost trend rate assumed for next year Rate to which the cost trend rate is assumed to decline (ultimate trend) Year the rate reaches the ultimate trend rate 4.75 6.50% 8.25 3.75 4.50 (3) (7) 74 322 Other Benefit Plans 2006 6.00 9.00 4.50 6.00 4.50 - 2007 9.00% 2005 56 87 5.00% 2014 One Percentage Point Increase (3) (7) . $35 320 25 158 $2 132 5 The following table displays the assumed health care cost trend rates, for all individuals: 2005 5.75 9.00 4.50 A one-percentage-point change in assured health care cost trend rates would have the following effect: 5.00 4.25 2006 9.00 4.50 2012 Dne-Percentage- Point Decrease $ (27) (259)
Expert Answer:
Answer rating: 100% (QA)
i The combined retirement and other benefits expense over the past three years has increased from 2049 million in 2017 to 2233 million in 2018 and the... View the full answer
Related Book For
Human Resource Management
ISBN: 978-0078029127
12th edition
Authors: John Ivancevich, Robert Konopaske
Posted Date:
Students also viewed these accounting questions
-
What differences might one see in how defined benefit plans are reported on the balance sheet under IFRS compared to a company that uses U.S. GAAP?
-
What strategic competitive benefits do you see in a companys use of extranets?
-
Do you think that non store retailing will continue to grow faster than store-based retailing? Explain your answer.
-
A new out-of-state client, Robert Ball, has asked you to prepare a Form 709 for a large gift he made in 2013. When you request copies of any prior gift tax returns he may have filed, he responds,...
-
An object initially at rest experiences an acceleration of 1.5 m/s2 for 6.0 s and then travels at that constant velocity for another 8.0 s. What is the objects average velocity over the 14-s interval?
-
A thin, uniform rod has length L and mass M. A small uniform sphere of mass m is placed a distance x from one end of the rod, along the axis of the rod (Fig. 12.34). (a) Calculate the gravitational...
-
What are the ethical obligations in using social media sites in litigation?
-
Three different plans for financing a $60,000,000 corporation are under consideration by its organizers. Under each of the following plans, the securities will be issued at their par or face amount,...
-
Minden Company is a wholesale distributor of premium European chocolates. The company's balance sheet as of April 30 is given below: Minden Company Balance Sheet April 30 Assets Cash Accounts...
-
Comparative statements of shareholders? equity for Anaconda International Corporation were reported as follows for the fiscal years ending December 31, 2021, 2022, and 2023. Required: 1. Infer from...
-
Dr. Cahill has been buying rugs for a home she bought last year. Today she received an email generated by CRM software that nudged her to buy yet another, in a style that happens to be consistent...
-
What accounting standards govern the reporting of franchise revenues and expenses?
-
Describe when to apply deductions versus credits for various VITA clients.
-
Write a MatLab program in which the guessing game from below is modified to allow the user to guess up to 4 times. If the number wasn't guessed correctly after the 4 tries, tell the user what the...
-
Identify at least 20 different materials that are used in various products at home.
-
The values of m for which y = is a solution to the DE zy" +2ry-2y=0 are (enter integers or fractions from smallest to largest) hint: smallest means to the left on the number line.
-
a) What is financial leverage and why it is important? Click or tap here to enter text. (2 Marks) b) After the covid-19 pandemic X Ltd is planning to expand their business by permanently moving to an...
-
In Exercises discuss the continuity of each function. f(x) -3 1 x - 4 y 3 2 -1 -2 -3+ 3 X
-
What are the Sullivan Principles? How have they helped organizations understand the ethical issues they face when conducting business in foreign cultures?
-
What core information should be included in most job descriptions and job specifications?
-
What difficulties would an HR executive face in assessing and then communicating the contribution of his or her area to the company profit margin?
-
(a) Describe the effect of temperature on the equilibrium constant. (b) Industrial \(\mathrm{CH}_{3} \mathrm{OH}\) is prepared according to the reaction \[ \mathrm{CO}(\mathrm{g})+2...
-
Mention the areas of application of the fuel cell.
-
Estimate the standard free energy change and equilibrium constant at \(700 \mathrm{~K}\) for the reaction \[ \mathrm{N}_{2}(\mathrm{~g})+3 \mathrm{H}_{2}(\mathrm{~g})=2 \mathrm{NH}_{3}(\mathrm{~g})...
Study smarter with the SolutionInn App