Common Questions About Deferred Compensation
Summary of Common Questions About Deferred CompensationWhat is the accounting entry for deferred compensation?What kind of account is a deferred compensation account?What is the accounting entry for deferred income?How is deferred compensation paid out?Search Results
AI Overview
AI Overview
Accounting for deferred compensation involves recognizing an expense and a corresponding long-term liability (often "Deferred Compensation Payable") as employees earn the benefit, typically based on the present value of future payments
. It requires accruing the obligation over the service period, commonly using a straight-line method.
Key Accounting Components
Expense Recognition: Debit "Deferred Compensation Expense" to reduce net income in the period it is earned.
Liability Recognition: Credit a "De...