Caterpillar, inc. discloses the following pension footnote in its 2016 10-k report (in millions):

u. s. pension benefits

2016

change in benefit obligation

benefit obligation, beginning of year

$15,792

service cost

119

interest cost

517

plan amendments



actuarial losses (gains)

767

foreign currency exchange rates



participant contributions



benefits paid - gross

(970

)

less: federal subsidy on benefits paid



curtailments, settlements and termination benefits

(7

)

benefit obligation, end of year

$16,218

the fair value of caterpillar’s u. s. pension assets is $11,354 million as of 2016.

what is the funded status of the plan, and how will this be reflected on caterpillar’s balance sheet?

select one:

a. the pension plan is overfunded by $4,438 million and is reported as an asset on the company’s balance sheet.

b. the pension plan is underfunded by $4,864 million and is reported as a liability on the company’s balance sheet.

c. the pension plan is overfunded by $4,864 million and is reported as an asset on the company’s balance sheet.

d. the pension plan is underfunded by $6,804 million and is reported as a liability on the company’s balance sheet.

e. the pension plan is underfunded by $4,438 million and is reported as a liability on the company’s balance sheet.

Salvador county issued $25 million of 5% demand bonds for construction of a county maintenance building. the county has no take-out agreement related to the bonds. it estimates that 20% of the bonds would be demanded (called) by the buyers if interest rates increased at least 1%. at year-end rates on comparable debt were 7%. how should these demand bonds be reported in the government-wide financial statements at year-end? a) $25 million in the long-term liability section of the governmental activities column. b) $5 million in the current liability section of the governmental activities column and $20 million in the long-term liabilities section of the governmental activities column. c) $5 million in the governmental activities column and $20 million would be reported in the schedule of changes in long-term debt obligations. d) $25 million in the current liability section of the governmental activities column

Cardinal company is considering a project that would require a $2,725,000 investment in equipment with a useful life of five years. at the end of five years, the project would terminate and the equipment would be sold for its salvage value of $400,000. the company’s discount rate is 14%. the project would provide net operating income each year as follows: sales $2,867,000 variable expenses 1,125,000 contribution margin 1,742,000 fixed expenses: advertising, salaries, and other fixed out-of-pocket costs $706,000 depreciation 465,000 total fixed expenses 1,171,000 net operating income $571,000 1. which item(s) in the income statement shown above will not affect cash flows? (you may select more than one answer. single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. any boxes left with a question mark will be automatically graded as incorrect.) (a)sales (b)variable expenses (c) advertising, salaries, and other fixed out-of-pocket costs expenses (d) depreciation expense 2. what are the project’s annual net cash inflows? 3.what is the present value of the project’s annual net cash inflows? (use the appropriate table to determine the discount factor(s) and final answer to the nearest dollar amount.) 4.what is the present value of the equipment’s salvage value at the end of five years? (use the appropriate table to determine the discount factor(s) and final answer to the nearest dollar amount.) 5.what is the project’s net present value? (use the appropriate table to determine the discount factor(s) and final answer to the nearest dollar amount.)

Describe how to write a main idea expressed as a bottom-line statement