Analyzing Retirement Fund Obligations The following information is taken from th

Question

Analyzing Retirement Fund Obligations The following information is taken from the 2014 annual report of the Johnson & Johnson Company (&J;): 2014 2013 ($ millions) Projected benefit obligation Plan assets at fair value Net amount recognized in the company's balance sheet (as a liability) $26,889 $21,488 22,575 20,901 4,314 587 Calculate the amount that j&J;'s retirement fund obligations are underfunded as of each year-end (in millions) 2014 million 2013 $ How much of the underfunding is reported on the company's balance sheet? 2014 2013 $ rnillio Check

Explanation / Answer

Underfunded retirement obligations = Projected benefit obligation - Plant Assets at fair value

Underfunded retirement obligations 2014 = $26,889 million - $22,575 million = $4,314 million

Underfunded retirement obligations 2013 = $21,488 million - $20,901 million = $587 million

Underfunded reporting on the company's balance sheet :-

2014 = $4,314 million

2013 = $587 million

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