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Accounting for Long-Term Severance

My company has set up a long-term severance for an executive to be paid out over a 5 year period. During this time he will still be doing work for the company.

We are trying to figure out the correct way to record it in the books. We currently have it set up as a long-term liability:

long-term Liability ______________________xxxxxx
contract severance expense xxxxxx

We adjust it with every payment made to the employee. I know I am missing something and I am still gaining experience in this area of accounting. The P & L shows the entire long-term expense which shows a loss for the period.

Can someone give me some guidance.

Thanks

Answers

Anonymous
(CFO) |

ASC 712-10 Compensation — Nonretirement Postemployment Benefits

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