Sears Canada Inc. offers Canadian consumers a diverse array of shopping options, with department and specialty stores, a comprehensive website, and a broad range of home- related services. At February 2, 2013, Sears had approximately 35,000 associates (or employees) helping customers through their personal shopping and catalogue ordering. The company€™s annual report for 2012 included the following information:
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
20. Retirement benefit plans
The Company currently maintains a defined benefit registered pension plan and a defined contribution registered pension plan which covers eligible, regular full- time associates as well as some of its part- time associates. The defined benefit plan provides pensions based on length of service and final average earnings. . . . In July 2008, the Company amended its pension plan and introduced a defined contribution component. The defined benefit component continues to accrue benefits related to future compensation increases although no further service credit is earned. In addition, the Company no longer provides medical, dental and life insurance benefits at retirement for associates who had not achieved the eligibility criteria for these non-pension post-retirement benefits as at December 31, 2008.
Source: Sears Canada Inc., Annual Report 2012.
In addition, a note to the company€™s financial statements indicates that it adopted changes to its accounting for retirement benefit obligations pursuant to an amendment to IAS 19.
The company€™s statements of financial position at February 2, 2013, and January 28, 2012, include the following information (in millions of dollars):

Required:
1. Compare and contrast defined benefit and defined contribution pension plans.
2. What change did Sears introduce to its employee retirement program in July 2008? What is the main reason for this change? Explain.
3. Compute and interpret the debt- to- equity ratio using the amounts reported in the 2011 annual report.
4. Sears adopted the amendments to IAS 19 (Employee Benefits) in the first quarter of 2012 and adjusted its assets and liabilities as at January 28, 2012, accordingly. The adjustments resulted in a significant decrease in shareholders€™ equity due primarily to the increase in the retirement benefit liability. Compute the debt- to-equity ratio based on the restated amounts at January 28, 2012. Do you think Sears management would have made these adjustments voluntarily? Explain.

February 2, 2013 January 28,2012 Amounts Restated in Amounts Reported in 2012 Annual Repor 2011 Annual Report Total assets Shareholders equity Retirement benefit liability $2,479.1 1,076.4 415.7 $2.730.7 1,092.0 452.3 $2.834.4 1,460.3 144.1