Pension is a type of post-employment benefits provided to employees. Defined benefit (DB) and defined contribution (DC) pension plans are two different forms of retirement adopted by companies. A DC pension plan is one in which contributions are made to the pension plan by the employer. These plans are then invested via a financial intermediary. Both the employee and the employer can contribute to the plan. However, there is no obligation for the employer other than to contribute to the plan. The future benefit to the employee depends on the performance of the funds. Therefore, the risk regarding future benefits is borne by the employee and not the employer. Reporting in the DC plan is simple because the employer only makes contributions with no future obligation, so contributions are expensed in the income statement. Only a current liability can appear on the balance sheet if unpaid contributions are accumulated. Unlike the DC plan, a DB plan is one in which the employer promises to contribute a set amount in the future. The amount defined is generally based on...