Recognition of Contributions in Defined Contribution Plans

XYZ Corporation sponsors a defined contribution plan for its employees. Each employee is required to contribute 5% of their salary to the plan, and XYZ Corporation matches this with an additional contribution of up to 3% of the employee's annual salary. The total contribution limit by the IRS for the defined contribution plan is $61,000 for the year 2022.

As an analyst evaluating XYZ Corporation's financial statements, you are looking to determine how the company recognizes these contributions in its financial reporting requirements.

What is the key aspect of financial reporting concerning defined contribution plans like the one sponsored by XYZ Corporation?