CPA's - Financial Statement Presentation

[BulldogTom]

C Corp (closely held) has a deferred comp agreement with a key salesman that cliff vests after 5 years. The yearly accruals are unfunded and paid out in 5 annual installments after the five year vesting period.

I am thinking this is a note in the financial statements until the vest.

On the tax side, I think it is income when paid to the employee and deductible at that time to the corp.

Any problems with this treatment? I am not an expert on FASB pronouncements, and I am sure they must have some guidance.

Thanks in advance.

Tom

Lodi, CA

[RoyDaleOne]

An accrual should be made in each period (year) the deferred compensation is earned.

Matching the expense to the period it was earned by the salesman.

This accrual should be made if it is more likely than not the salesman will vest. Or some stupid test like that.

Footnote is also required.