International Paper, Inc. disclosed the following pension information in its 2016 annual report:
Required:
a. The U.S. pension plan is underfunded by $3,371 million in 2016. How does this fact affect International Paper's 2016 balance sheet?
b. What is "service cost"? How does it affect the company's pension expense for the year?
c. What average interest rate did International Paper use to calculate interest cost on its U.S. pension plan during 2016?
d. How much did International Paper contribute to both of its pension plans during 2016? How does that compare to the contribution in 2015?
e. What amount of pension benefits were paid to former employees for all plans during 2016?
f. Why do the benefits paid affect both the pension obligation and the pension assets?

Question

International Paper, Inc. disclosed the following pension information in its 2016 annual report:
  Required: 
a. The U.S. pension plan is underfunded by $3,371 million in 2016. How does this fact affect International Paper's 2016 balance sheet?
b. What is "service cost"? How does it affect the company's pension expense for the year?
c. What average interest rate did International Paper use to calculate interest cost on its U.S. pension plan during 2016?
d. How much did International Paper contribute to both of its pension plans during 2016? How does that compare to the contribution in 2015?
e. What amount of pension benefits were paid to former employees for all plans during 2016?
f. Why do the benefits paid affect both the pension obligation and the pension assets?

Quizplus · Accepted Answer

The Answer of International Paper, Inc. disclosed the following pension information in its 2016 annual report:
  Required: 
a. The U.S. pension plan is underfunded by $3,371 million in 2016. How does this fact affect International Paper's 2016 balance sheet?
b. What is "service cost"? How does it affect the company's pension expense for the year?
c. What average interest rate did International Paper use to calculate interest cost on its U.S. pension plan during 2016?
d. How much did International Paper contribute to both of its pension plans during 2016? How does that compare to the contribution in 2015?
e. What amount of pension benefits were paid to former employees for all plans during 2016?
f. Why do the benefits paid affect both the pension obligation and the pension assets?