[header] How to account for deferred compensation [title] Determine the terms of the deferred compensation package. [step] 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. 
[title] Get the interest rate used for the present value calculation. [step] To calculate the present value, you'll need an interest rate that represents a low-risk investment.