Question

Pension data for Fahy Transportation Inc. include the following: ($ in millions) Discount rate, 9% Expected return on plan assets, 12% Actual return on plan assets, 13% Projected benefit obligation, January 1 $ 550 Plan assets (fair value), January 1 500 Plan assets (fair value), December 31 560 Benefit payments to retirees, December 31 68 Required: Assuming cash contributions were made at the end of the year, what was the amount of those contributions

Answer 1

the amount of those contributions is $63 million

Step-by-step explanation:

The computation of the amount of those contributions is shown below:

Plan assets, end of year $560

Less: Plan assets, Starting of the year -$500

Less: Actual return -$65 ($500 × 13%)

Add: Retiree benefits paid $68

Cash contributions $63 million

Hence, the amount of those contributions is $63 million