What happens next?

How to account for deferred compensation
Determine the terms of the deferred compensation package.
Understanding the structure of the pay package is essential to executing the proper accounting treatment. For example, consider a compensation plan issued in 2015 that will pay out a lump sum of $100 , 000 to an employee in 2020.
Get the interest rate used for the present value calculation. To calculate the present value, you'll need an interest rate that represents a low-risk investment.