I've got 9 out of 10 questions correct, but I am stumped on this one:

 

Defined Benefit Pension Plan Terms

In a recent year's financial statements, Procter & Gamble showed an unfunded pension liability of $5,599 million and a periodic pension cost of $434 million.

Select the correct statement that reflects the meaning of the $5,599 million unfunded pension liability.

a. The $5,599 million unfunded pension cost is a measure of the amount of pension paid out the retirees during the year.

b. The obligation decreases yearly by the amount of the $5,599 million unfunded pension cost.

c. The $5,599 million unfunded pension liability is the approximate amount that the value of the net assets of the pension plan exceeds the pension obligation.

d. The $5,599 million unfunded pension liability is the approximate amount of the pension obligation that exceeds the value of the net assets of the pension plan.

The correct answer is: ????????????

 

 

Select the correct statement that reflects the meaning of the $434 million periodic pension cost.

a. The $434 million periodic pension cost is a measure of the amount of pension paid out the retirees during the year.

b. The obligation decreases yearly by the amount of the $434 million periodic pension cost.

c. The $434 million periodic pension cost is a measure of the amount of pension earned by employees during the year.

d. The $434 million periodic pension liability is the approximate amount of the pension obligation that exceeds the value of the net assets of the pension plan.

The correct answer is: ????????????

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The book step by step on Chegg gives this explanation, but I still don't get it. This is also what the last tutor on coursehero gave me (which was what he found online obviously):

 

The pension obligation in excess of net assets of the pension plan is represented by the unfunded pension liability amounting to $5,599 million. P&G was unable to fund the plan requirements that are relative to the obligation as a result of lower contribution to pension plan.

 

The yearly obligation of pension cost is a measure of employee's annual pension cost amounting to $434 million. This cost would be determined under certain assumptions such as life expectancies of employees, turnover of employees etc.

SuperTutor

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Status NEW Posted 11 Jul 2017 06:07 AM My Price 9.00

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