Post-Employment Plan Assets ($ thousands)
| 31 December 2015 | ||
|---|---|---|
| Pension Plan A | Health Care Plan | |
| Fair value, beginning of year | 40,900 | 0 |
| Interest income on plan assets | 1,636 | |
| Re-measurement gains recognized in other comprehensive income | 1,841 | |
| Employer contribution | 3,150 | 950 |
| Participant contribution | 1,250 | |
| Benefits paid | (2,080) | (950) |
| Fair value, end of year | 46,697 | 0 |
Exhibit 3
Present Value of the Defined Obligations ($ thousands)
| 31 December 2015 | ||
|---|---|---|
| Pension Plan A | Health Care Plan | |
| Balance, beginning of year | 58,700 | 6,900 |
| Current service cost | 1,850 | 300 |
| Interest cost | 2,348 | 276 |
| Participant contributions | 1,250 | 0 |
| Benefits paid | (2,080) | (950) |
| Re-measurement losses recognized in other comprehensive income because of changes in assumptions | 3,460 | 2,400 |
| Balance, end of year | 65,528 | 8,926 |
Exhibit 4
Post-Employment Plan Expenses and Other Information ($ thousands)
| 31 December 2015 | ||
|---|---|---|
| Pension Plan A | Health Care Plan | |
| Current service cost | 1,850 | 300 |
| Net interest expense | 712 | 276 |
| Net retirement expense for the year | 2,562 | 576 |
| Actual return on plan assets | 3,477 | 0 |
Shah starts his cash flow analysis by determining the total cash outflow from the post-employment plans for SMC in 2015. He explains to Zhang that from an economic perspective, sometimes a portion of a company’s contribution to a plan should be considered similar to a principal repayment and not included in cash from operations. He intends to make this adjustment if appropriate.
Q. If Shah adopts the economic perspective (versus the traditional approach for determining cash from operations) as explained to Zhang for Pension Plan A, the cash from operations will most likely be:
- higher by $588.
- unchanged.
- higher by $1,838.
Solution
A is correct.
| 2015 | ($ thousands) |
| University contributions (Exhibit 2) | 3,150 |
| Total pension expense (Exhibit 4) | 2,562 |
| Excess payment over expense | 588 |
这个2562是什么概念，我用期末fund state-期初-contrbution=-4181，用4181-3150=1031 得出cff上涨1031 cfo应该降低1013
