(a) How much pension expense (revenue) does DuPont report in its 2012 income statement?DuPont reports pension=of $0million.(b) DuPont reports a $1,517 million expected return on pension plan assets as an offset to 2012 pension expense. Estimate what the expected return would have been had Dupont not changed the assumption on the expected return in 2012. (Round your dollar answers to the nearest whole number.)$0millionWhat is DuPont's actual gain or loss realized on its 2012 pension plan assets?0($ million)(c) What main factors affected DuPont's pension plan assets and pension liability during 2012?Oinvestment gains and employer contributions increased the plan assets. Service costs, interest costs, and actuarial losses increased the pension liability, and benefit payments reduced the liability. Benefits were paid directly by the company and did not affect plan assetsOinvestment gains and employer contributions increased the plan assets, and benefits paid reduced plan assets. Service costs and actuarial losses increased the pension liability, and benefit payments reduced the liability. Interest reflects the amount the company paid to its lenders and did not affect the pension obligation directly.Oinvestment gains and employer contributions increased the plan assets, and benefits paid reduced plan assets. Service costs, interest costs and actuarial losses increased the pension liability, and benefit payments reduced the liability.Oinvestment gains and employer contributions increased the plan assets, and benefits paid reduced plan assets. Service costs, interest costs and actuarial losses decreased the pension liability, and benefit payments reduced the liability.(d) What does the term funded status mean? What is the funded status of the 2012 DuPont pension plans?O"Funded status" reveals how much cash the plan has.O"Funded status" reflects the contributions that the company has made to the plan.O"Funded status" is the excess or deficiency of the pension obligation over plan assets.O"Funded status" refers to the extent to which the plan assets are invested in mutual funds.DuPont's pension plan is=by $ 0million(e) DuPont decreased its discount rate from 5.32% to 4.32% in 2012. What effect(s) does this decreasehave on its balance sheet and its income statement?OA decrease in the discount rate increases the PBO and increases pension cost.OA decrease in the discount rate increases the PBO and decreases pension cost.OA decrease in the discount rate reduces the PBO and decreases pension cost.OA decrease in the discount rate increases the PBO and has no effect on pension cost.(f) How did DuPont's pension plan affect the company's cash flow in 2012?OThe company's cash flow increased as the increase in pension assets more than offset the increase in the PBO.OThere was no effect on the company's cash flow as all benefit payments are paid from plan assets.OThe company contributed cash to its pension plan in 2012. This contribution directly affected the company's cash flow.OThe company's cash flow increased by the gains on the plan's investment portfolio and decreased by the benefits paid to plan participants.(g) Explain how the returns on pension assets affect the amount of cash that DuPont must contribute to fund the pension plan.Oshould pension investments decline as a result of a decline in the financial markets, DuPont might be required to increase its cash contribution to the pension plan.OAsset returns have no effect on DuPont's cash flow because they are recognized in the pension plan and not on the company's financial statements.OAsset returns have no effect on DuPont's cash flow because increases in the PBO provide whatever financing the plan needs.OAsset returns have no effect on DuPont's cash flow because employee contributions make up any shortfall. Analyzing and Interpreting Pension DisclosuresE.I. Du Pont De Nemours and Co.'s 10-K report has the following disclosures related to its retirement plans ($ millions).Obligations and Funded StatusDecember 31 ($ millions)Change in benefit obligationPension Benefits2012 2011Benefit obligation at beginning of year$27,083 $23,924Service cost2772491,1651,2532421Interest costPlan participants' contributionsActurarial lossBenefits paidAmendmentsNet effects of acquisitions/divestituresBenefit obligation at end of yearChange in plan assetsFair value of plan assets at beginning of yearActual gain on plan assetsEmployer contributionsPlan participants' contributionsBenefits paid2,245 3,062(1,593) (1,610)(22)2182$29,179 $27,083$ 17,794 $18,4032,3264718483412421(1,593) (1,610)Net effects of acquisitions/divestitures168Fair value of plan assets at end of year$19,399 $17,794Funded statusU.S. plans with plan assets$(6,625) $892Non-U.S. plans with plan assetsAll other plans(1,443) (317)(1,712) (1,515)TotalAmount recognized in the Consolidated BalanceSheets consist of:$(9,780) $ (9,289)Other assetsOther accrued liabilitiesOther liabilitiesLiabilities related to assets held for saleNet amount recognized$5(4)(110) (107)(9,303) (9,186)(372)(9,780) (9,289)Pension Benefits(in millions)Components of net periodicbenefit cost (credit)2012 2011 2010Net periodic benefitService cost$277 $249 $207Interest cost1,165 1,253 1,262Expected return on plan assets(1,517) (1,475) (1,435)Amortization of loss887613 507Amortization of prior service cost131616Curtailment/settlement loss7-Net periodic benefit cost$832 $656$557Weighted-avg. assumptions used for net periodic benefit cost for years ended Dec. 31 2012 2011 2010Discount RateExpected return on plan assetsRate of compensation increase4.32% 5.32% 5.80%8.61% 8.73% 8.64%4.18 % 4.24 % 4.24%The following benefit payments, which reflect future service, as appropriate, are expected to be paid:($ millions)Pension Benefits20132014201520162017Years 2018-2022$1,6291,6041,6291,6371,6678,678HINT: Do not use negative signs with your answers.

Question

(a) How much pension expense (revenue) does DuPont report in its 2012 income statement?DuPont reports pension=of $0million.(b) DuPont reports a $1,517 million expected return on pension plan assets as an offset to 2012 pension expense. Estimate what the expected return would have been had Dupont not changed the assumption on the expected return in 2012. (Round your dollar answers to the nearest whole number.)$0millionWhat is DuPont's actual gain or loss realized on its 2012 pension plan assets?0($ million)(c) What main factors affected DuPont's pension plan assets and pension liability during 2012?Oinvestment gains and employer contributions increased the plan assets. Service costs, interest costs, and actuarial losses increased the pension liability, and benefit payments reduced the liability. Benefits were paid directly by the company and did not affect plan assetsOinvestment gains and employer contributions increased the plan assets, and benefits paid reduced plan assets. Service costs and actuarial losses increased the pension liability, and benefit payments reduced the liability. Interest reflects the amount the company paid to its lenders and did not affect the pension obligation directly.Oinvestment gains and employer contributions increased the plan assets, and benefits paid reduced plan assets. Service costs, interest costs and actuarial losses increased the pension liability, and benefit payments reduced the liability.Oinvestment gains and employer contributions increased the plan assets, and benefits paid reduced plan assets. Service costs, interest costs and actuarial losses decreased the pension liability, and benefit payments reduced the liability.(d) What does the term funded status mean? What is the funded status of the 2012 DuPont pension plans?O&#34;Funded status&#34; reveals how much cash the plan has.O&#34;Funded status&#34; reflects the contributions that the company has made to the plan.O&#34;Funded status&#34; is the excess or deficiency of the pension obligation over plan assets.O&#34;Funded status&#34; refers to the extent to which the plan assets are invested in mutual funds.DuPont's pension plan is=by $ 0million(e) DuPont decreased its discount rate from 5.32% to 4.32% in 2012. What effect(s) does this decreasehave on its balance sheet and its income statement?OA decrease in the discount rate increases the PBO and increases pension cost.OA decrease in the discount rate increases the PBO and decreases pension cost.OA decrease in the discount rate reduces the PBO and decreases pension cost.OA decrease in the discount rate increases the PBO and has no effect on pension cost.(f) How did DuPont's pension plan affect the company's cash flow in 2012?OThe company's cash flow increased as the increase in pension assets more than offset the increase in the PBO.OThere was no effect on the company's cash flow as all benefit payments are paid from plan assets.OThe company contributed cash to its pension plan in 2012. This contribution directly affected the company's cash flow.OThe company's cash flow increased by the gains on the plan's investment portfolio and decreased by the benefits paid to plan participants.(g) Explain how the returns on pension assets affect the amount of cash that DuPont must contribute to fund the pension plan.Oshould pension investments decline as a result of a decline in the financial markets, DuPont might be required to increase its cash contribution to the pension plan.OAsset returns have no effect on DuPont's cash flow because they are recognized in the pension plan and not on the company's financial statements.OAsset returns have no effect on DuPont's cash flow because increases in the PBO provide whatever financing the plan needs.OAsset returns have no effect on DuPont's cash flow because employee contributions make up any shortfall. Analyzing and Interpreting Pension DisclosuresE.I. Du Pont De Nemours and Co.'s 10-K report has the following disclosures related to its retirement plans ($ millions).Obligations and Funded StatusDecember 31 ($ millions)Change in benefit obligationPension Benefits2012 2011Benefit obligation at beginning of year$27,083 $23,924Service cost2772491,1651,2532421Interest costPlan participants' contributionsActurarial lossBenefits paidAmendmentsNet effects of acquisitions/divestituresBenefit obligation at end of yearChange in plan assetsFair value of plan assets at beginning of yearActual gain on plan assetsEmployer contributionsPlan participants' contributionsBenefits paid2,245 3,062(1,593) (1,610)(22)2182$29,179 $27,083$ 17,794 $18,4032,3264718483412421(1,593) (1,610)Net effects of acquisitions/divestitures168Fair value of plan assets at end of year$19,399 $17,794Funded statusU.S. plans with plan assets$(6,625) $892Non-U.S. plans with plan assetsAll other plans(1,443) (317)(1,712) (1,515)TotalAmount recognized in the Consolidated BalanceSheets consist of:$(9,780) $ (9,289)Other assetsOther accrued liabilitiesOther liabilitiesLiabilities related to assets held for saleNet amount recognized$5(4)(110) (107)(9,303) (9,186)(372)(9,780) (9,289)Pension Benefits(in millions)Components of net periodicbenefit cost (credit)2012 2011 2010Net periodic benefitService cost$277 $249 $207Interest cost1,165 1,253 1,262Expected return on plan assets(1,517) (1,475) (1,435)Amortization of loss887613 507Amortization of prior service cost131616Curtailment/settlement loss7-Net periodic benefit cost$832 $656$557Weighted-avg. assumptions used for net periodic benefit cost for years ended Dec. 31 2012 2011 2010Discount RateExpected return on plan assetsRate of compensation increase4.32% 5.32% 5.80%8.61% 8.73% 8.64%4.18 % 4.24 % 4.24%The following benefit payments, which reflect future service, as appropriate, are expected to be paid:($ millions)Pension Benefits20132014201520162017Years 2018-2022$1,6291,6041,6291,6371,6678,678HINT: Do not use negative signs with your answers.

Accepted Answer

. DuPont's Pension Obligation:The pension benefit obligation (PBO) increased from $27,083 million at…