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Stock Compensation –FASB Discusses Stock Compensation
Improvements to Nonemployee Share-Based Payment Accounting - FASB ASU 2018-07
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Stock Compensation –FASB Discusses Stock Compensation
Summary - As reported in its “Summary of Decisions” publication, the FASB met on November 1, 2023, and discussed feedback received and issues for redeliberation on the proposed ASU, Compensation: Stock Compensation (Topic 718): Scope Application of Profits Interest Awards, and made a number of decisions, including the following:
- Affirmed its decision that the amendments apply to all entities, including public business entities (PBEs) and entities other than PBEs;
- Clarified that the amendments apply to awards to both employees and nonemployees; and
- Decided that the amendments will be effective for PBEs for fiscal years beginning after December 15, 2024, and interim periods within those fiscal years.
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Improvements to Nonemployee Share-Based Payment Accounting - FASB ASU 2018-07
Summary - The FASB has issued an Accounting Standards Update (ASU) intended to reduce cost and complexity and to improve financial reporting for nonemployee share-based payments.
The ASU expands the scope of Topic 718, Compensation—Stock Compensation (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. The ASU supersedes Subtopic 505-50, Equity—Equity-Based Payments to Non-Employees.
The amendments in this ASU are effective for public companies for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. For all other companies, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, but no earlier than a company’s adoption date of Topic 606, Revenue from Contracts with Customers.