Close
Close

Share-based payments guidance simplified

This bulletin has been updated to reflect the FASB staff’s clarification of the impact of modifying an award to increase the level of tax withholdings.

[Download the PDF]
The FASB recently issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, to simplify several aspects of accounting for share-based payment transactions, including the following areas: accounting for excess tax benefits and tax deficiencies; classifying excess tax benefits on the statement of cash flows; accounting for forfeitures; classifying awards that permit share repurchases to satisfy statutory tax withholding requirements; classifying tax payments on behalf of employees on the statement of cash flows; and, for nonpublic entities only, determining the expected term and electing the intrinsic value measurement alternative for stock option awards.

The new guidance is effective for public business entities in fiscal years beginning after Dec. 15, 2016, and in interim periods within those fiscal years. Other entities must apply the new guidance in fiscal years beginning after Dec. 15, 2017, and in interim periods within fiscal years beginning after Dec. 15, 2018.

The guidance requires a mix of prospective, modified retrospective and retrospective transition.