Chapter 11, Problem 11.18EX

A.

To determine

Pension: Pension is a cash payment given to the employees at the time of their retirement. The pension benefits are accrued based on years of service, annual compensation and age, and based on the employer’s pension plan. There are mainly to basic types of pension plans:

• Defined contribution pension plan
• Defined benefits pension plan

To journalize: The entries to record the accrued pension liability on December 31.

B.

To determine

To state: the different between defined contribution plan and defined benefit plan.