Analyzing Retirement Fund Obligations Assume the following information is taken

Question

Analyzing Retirement Fund Obligations Assume the following information is taken from the 2014 annual report of the Johnson & Johnson Company (U&): (s millions) Projected benefit obligation Plan assets at fair value Net amount recognized in the company's balance sheet (as a liability) 5,214 2,374 2014 2013 $27,889 $22,483 22,675 20,109 Calculate the amount that J&'s retirement fund obligations are underfunded as of each year-end (in millions) 2014 $ 0 million 2013 0million How much of the underfunding is reported on the company's balance sheet? 2014 2013 0million x millior Check

Explanation / Answer

1) The amount that J&J's retirement fund obligations are underfunded as of gach year-end is :

2014 2013

project benefit obligation $27,889 $22,483

Plain asset at fair value - $22675 - $20109

difference $5214 $2374

So, the retirement fund obligation of J&J which is underfunded for the year 2014 and 2013 are $5214 and $ 2374 because these amounts are in short of value of plain assets over the projected benefit obligation.

2) The underfunding reported in the balance sheet are $ 5214 for year 2014 and $2374 for year 2013 because it is given in the question itself that the amount of $5214 and $2374 is recognized in the balance sheet of J&J as a liability in both the years.

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