Measuring and Classifying Share-Based Payments Granted to Customers

In June 2018, the FASB issued ASU No. 2018-07, Compensation-Stock Compensation (718): Improvements to Nonemployee Share-Based Payment Accounting, which amended the FASB Accounting Standards Codification (ASC) by expanding the scope of FASB ASC Topic 718, Compensation-Stock Compensation, to include s...

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Bibliographic Details
Published inAccounting & Auditing Update Service no. 40; pp. 1 - 2
Main Author Afterman, Allan B
Format Trade Publication Article
LanguageEnglish
Published New York Thomson Reuters (Tax & Accounting) Inc 01.11.2019
Subjects
Accounting
Calendars
Compensation
Customers
Equity
Fair value
Fiscal years
Liability
Retained earnings
United States > US
Online AccessGet full text
ISSN1045-1447

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Summary:In June 2018, the FASB issued ASU No. 2018-07, Compensation-Stock Compensation (718): Improvements to Nonemployee Share-Based Payment Accounting, which amended the FASB Accounting Standards Codification (ASC) by expanding the scope of FASB ASC Topic 718, Compensation-Stock Compensation, to include share-based payment transactions for acquiring goods and services from non-employees (thereby superseding the guidance in FASB ASC Subtopic 505-50, Equity-Equity-Based Payments to Non-Employees). Pursuant to ASU No. 2019-08, share-based payments to a customer recorded as a reduction of revenue should be measured and classified according to the guidance in FASB ASC 718 based on fair value at the date of grant (i.e., the date at which the supplier/ grantor and the customer/grantee reach a mutual understanding of the key terms and conditions of the share-based payment award). FASB ASC 718 * FASB ASC 718-10-15, Compensation-Stock Compensation-Overall-Scope and Scope Exceptions, has been amended to (1) cover share-based payment transactions in which a grantor acquires goods or services to be used or consumed in the grantor's own operations or provides consideration payable to a customer, and (2) require that the transaction price (and, thus, revenue) be reduced by the share-based consideration payable to a customer in accordance with FASB ASC 606-10-32, unless the consideration is for the purchase of a distinct good or service from the customer, in which case the purchase should be accounted for in the same manner as the entity accounts for other purchases. * FASB ASC 718-10-35, Compensation-Stock Compensation-Overall-Subsequent Measurement, has been amended to clarify that classification and subsequent measurement of the award is subject to FASB ASC 718, unless the share-based payment award is modified and the grantee is no longer a customer.
ISSN:1045-1447