EXHIBIT 14-22 Pension Plan Assumptions for Aero Euro
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|
2008 |
2007 |
2006 |
|
Discount rate |
4.51% |
4.49% |
4.55% |
|
Salary inflation rate |
2.62% |
2.70% |
2.91% |
|
Expected long term rate |
|
|
|
|
Of return on plan assets |
5.70% |
5.70% |
5.13% |
EXHIBIT 14-23 Information Related to Aero Euro’s Defined-Benefit Plans
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|
|
|
|
|
|
Pension. Benefits ( millions) |
||
|
2008 |
2007 |
2006 |
|
|
Benefit obligation at beginning of year |
10,921 |
10,313 |
9,208 |
|
Service cost |
368 |
359 |
275 |
|
Interest cost |
489 |
461 |
447 |
|
Employees” contribution |
40 |
36 |
32 |
|
Plan amendments |
150 |
49 |
16 |
|
Settlement/curtailment |
(28) |
(11) |
(1) |
|
Benefits paid |
(423) |
(398) |
(352) |
|
Actuarial loss / (gain) |
68 |
106 |
707 |
|
Currency translation adjustment |
(3) |
6 |
(19) |
|
Benefit obligation at end of year |
11,582 |
10,921 |
10,315 |
|
Fair value of plan assets at beginning of year |
12,538 |
10,782 |
9,936 |
|
Actual return on plan assets |
936 |
1,763 |
920 |
|
Employed contributions |
323 |
358 |
261 |
|
Employees” contributions |
40 |
36 |
32 |
|
Settlement/curtailment |
(6) |
(6) |
|
|
Benefits paid |
(423) |
(398) |
(352) |
|
Currency translation adjustment |
(4) |
3 |
(15) |
|
Fair value of plan assets at beginning of year |
13,404 |
12,538 |
10,782 |
|
Funded status |
1,822 |
1,617 |
469 |
|
Unrecognized prior service cost |
190 |
59 |
25 |
|
Unrecognized Actuarial loss / (gain) |
(857) |
(710) |
322 |
|
Prepaid (accrued) pension cost |
1,155 |
966 |
816 |
|
Amount recorded in the balance sheet |
|
|
|
|
Pension assets |
2,097 |
1903, |
1,767 |
|
Provision for retirement. Benefits |
(942) |
(937) |
(951) |
|
Net amount recognized |
1,155 |
966 |
816 |
|
Net periodic cost |
|
|
|
|
Service cost |
368 |
359 |
275 |
|
Interest cost |
489 |
461 |
447 |
|
Expected return on plan assets |
(714) |
(616) |
(532) |
|
Settlement/curtailment |
(18) |
(8) |
|
|
prior service cost |
19 |
12 |
15 |
|
Amortization of unrecognized actuarial (gain)loss |
(1) |
16 |
(4) |
|
Other |
|
(1) |
|
|
Net periodic cost |
143 |
223 |
201 |
|
Accumulated benefit obligation |
10,018 |
9056 |
9,081 |
Andreas Kordt is an equity analyst examining the financial statements of Aero Euro. Aero Euro is based in Belgium and complies with IFRS. Kordt believes that the accounting guidelines for defined-benefit plans do not reflect the underlying economic financial conditions and he intends to adjust Aero Euro’s financial statements accordingly. He also wants to compare the reported financial statements to those of a company that follows U.S. GAAP. As an initial step, he pulled certain information relating to the plans, which is presented in Exhibits 14-22 and 14-23. The 2008 pension expense recognized on Aero Euro’s income statement is closest to
a. 143 million.
b. 423 million.
c. 1,155 million.