Apply guidance from the FASB codification and provide a definitive answer to cli

Question

Apply guidance from the FASB codification and provide a definitive answer to client question.

On 1/1/2016, Daigle Company hires Jill Joseph as its new CEO. As part of Joseph’scompensation package, Daigle promises to pay her (or her estate) $200,000 per year for the next 15 years, even if she leaves the company or dies. Daigle properly records this transaction as deferred compensation. Daigle expects Ms. Joseph to stay CEO for a total of 10 years. Over what time period should Daigle record this portion of her compensation cost?

Explanation / Answer

Diagle should record this compensation cost for a period of 15 years as the promise or contract for payment is for next 15 years.

But if we apply the rule of prudence principle , Daigle can book the expense for 10 years if he stays for 10 years only.

But according to question it is cost should be recorded for 15 years

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