Share-based payments: navigating ASC 718

The overarching principle of ASC 718, which codifies the FASB’s guidance on accounting for share-based arrangements, is to account for the fair value of both employee and nonemployee awards as compensation expense in the financial statements. Our updated, comprehensive 2026 version of Share-based payments: Navigating the guidance in ASC 718  provides guidance, examples, and insights on all aspects of accounting for share-based payments under ASC 718, including scope, classification, measurement, expense attribution, modification accounting, disclosure, and more.

The 2026 edition of our guide reflects recent amendments made by the FASB that impact the accounting for share-based payment awards, including:

• ASU 2024-01, Scope Application of Profits Interest and Similar Awards, which adds illustrative examples to U.S. GAAP that demonstrate how the scoping guidance in ASC 718 applies to profits interest or similar awards granted to employees and nonemployees as compensation. The amendments are intended to reduce existing diversity in practice so that, after adoption, profits interest awards with similar terms will be more consistently accounted for within the scope of either ASC 718, Compensation – Stock Compensation, or other Topics, such as ASC 710, Compensation – General.
• ASU 2025-04, Clarifications to Share-Based Consideration Payable to a Customer, which revises the definition of a “performance condition” in ASC 718 to explicitly include the types of vesting conditions commonly used for share-based payments in revenue contracts to incentivize customer purchases - 
  The amendments are designed to (1) reduce diversity in practice in accounting for share-based payment awards issued by entities (grantors) to customers (grantees) that vest when the grantee purchases the grantor’s goods or services, and (2) more closely align the accounting for share-based payment awards in ASC 718 with the core principle in ASC 606—to recognize revenue as the amount of consideration that an entity expects to be entitled to in exchange for transferring promised goods or services to a customer.

Download the 2026 version of Share-based payments: Navigating the guidance in ASC 718 (PDF - 2.50MB).