How to Record Reversal of Performance Share Accrual
Adjusts the books when it becomes probable that the performance conditions for a share-based award will not be met.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Additional Paid-in Capital - Performance Shares | Equity | 60,000.00 | - |
| Compensation Expense | Expense | - | 60,000.00 |
💡 Accountant's Note
If a performance condition (e.g., reaching a specific EBITDA target) is no longer probable of being achieved, the cumulative compensation expense previously recognized for that award is reversed in the current period.
Practitioner & Systems Framework
💻 ERP Architecture
Adjust the 'Probability' factor in the equity compensation module to 0% to trigger the automated reversal.
⚠️ Audit Flags
Evidence supporting the change in probability of achieving performance targets; timing of the reversal.
📄 Required Documentation
Updated financial forecasts, board compensation committee minutes, and original grant documentation.
Automate this entry with the JEH Accounting Suite
Stop doing manual entry. Our VBA-powered ERP automatically generates your ledgers, Trial Balance, and Financial Statements.
No Subscriptions. Own your data.
Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.
Related Journal Entries
Discussion & Community Questions
Loading comments...