FASB simplifies the accounting for share-based payments to nonemployees
Defining Issues | June 2018
KPMG reports on ASU 2018-07, which more closely aligns the accounting for employee and nonemployee share-based payments. However, differences remain in the accounting for attribution and a contractual term election for valuing nonemployee equity share options.
Applicability
- All companies that enter into nonemployee share-based payment transactions
Relevant dates
Effective date: | Public business entities | All other entities |
Annual periods – Fiscal years beginning after | December 15, 2018 | December 15, 2019 |
Interim periods – In fiscal years beginning after | December 15, 2018 | December 15, 2020 |
Early adoption allowed? Yes, but no earlier than the company’s adoption date of ASC 606, Revenue from Contracts with Customers
Key Impacts:
- The ASU allows companies to account for share-based payment transactions with nonemployees in the same way as share-based payment transactions with employees
- Differences remain in the accounting for attribution and a contractual term election for valuing nonemployee equity share options
- The ASU includes elections that offer relief to nonpublic companies when measuring nonemployee equity share options
- Entities transition using the modified retrospective approach with fair value measurement of unsettled liability-classified nonemployee awards and equity awards where a measurement date has not been established
Applicability
- Key facts and impacts
- Attribution of nonemployee awards
- Valuation of nonemployee equity share options
- Forfeitures
- Nonpublic company effective date election
- Effective date and transition
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FASB simplifies share-based payment accounting
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