What Is Involved in Accounting for Deferred Compensation?

Deferred income refers to income or income that has not yet been recognized, and can also be said to be temporarily unrecognized income. It is the application of accrual basis to revenue recognition. Compared with international accounting standards, in China's accounting standards and the "Enterprise Accounting System", the scope of deferred income application is very limited, mainly reflected in the relevant content of the lease standards and income standards.

Deferred income

On May 10, 2017, the second chapter of "Accounting and Measurement" of "Accounting Standards for Business Enterprises No. 16-Government Subsidy" No. [2017] No. 15

Article 8 Government subsidies related to assets shall be deducted from the book value of the relevant assets or recognized as deferred income. Where asset-related government subsidies are recognized as deferred income, they shall be charged to profit or loss in a reasonable and systematic manner over the useful life of the relevant assets. Government subsidies measured at nominal amounts are directly included in the current profit and loss.

If the relevant assets are sold, transferred, scrapped or damaged before the end of their useful lives, the remaining undistributed deferred income balance shall be transferred to the profit and loss of the current period of asset disposal.

Article 9 Government subsidies related to income shall be accounted for in accordance with the following conditions according to the situation:

(1) If it is used to compensate the related costs, expenses or losses of the enterprise in the subsequent periods, it shall be recognized as deferred income, and shall be included in the current profit or loss or offset related costs during the period when the related costs or losses are recognized;

(2) If it is used to compensate the related costs or losses already incurred by the enterprise, it shall be directly included in the current profit or loss or offset related costs.

Article 10 Government subsidies that include both asset-related and income-related parts shall be accounted for separately in different parts; if they are difficult to distinguish, they shall be classified as revenue-related government subsidies as a whole.

Article 11 Government subsidies related to the daily activities of enterprises shall be included in other income or offset related costs in accordance with the essence of economic operations. Government subsidies not related to the daily activities of enterprises shall be included in non-operating income and expenditure.

I. Basis Accounting Enterprises

When dealing with deferred income, enterprises should pay special attention to the related income tax issues. According to "About Enterprise

According to Chinese companies

Deferred income refers to income or income that has yet to be recognized. It can also be said to be temporarily unrecognized income. It is

Related income tax treatment

When dealing with deferred income, enterprises should pay special attention to the related income tax issues. According to the `` Notice on Taxation of Enterprise Subsidy Income and Other Issues '' (

The part of deferred income due within one year is included in the "Other non-current liabilities due within one year" item in the balance sheet, and other parts are included in the "deferred income" item. At the same time, in the notes to the financial statements, in the disclosure of government subsidies, the amount to be deferred should be listed.