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 2021 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.
In June 2018, the FASB issued ASU 2018-07, Improvements to Nonemployee Share-Based Payment Accounting,
which expands the scope of ASC 718 to include share-based payment transactions for nonemployees. The amendments, which mostly align the accounting for nonemployee awards with the existing accounting model for employee awards, were effective in 2019 for calendar-year public business entities and in 2020 for nonpublic entities. Our publication incorporates the accounting guidance for share-based payments for nonemployee awards under the amendments in ASU 2018-07, including changes to the accounting framework, terminology, and definitions in ASC 718. Section 11 in our publication highlights the few remaining differences between accounting for share-based payments for employees and nonemployees after an entity adopts ASU 2018-07.
The 2021 edition of our guide also includes the amendments under ASU 2019-08, Codification Improvements – Share Based Consideration Payable to a Customer,
which generally require entities to apply the guidance in ASC 718 when initially and subsequently measuring and classifying share-based payment awards granted to a customer. Based on the guidance in ASC 718, the amount measured on the award’s grant date should be presented as a reduction of revenue in accordance with the guidance in ASC 606, Revenue from Contracts with Customers
, since the consideration is paid to a customer. For entities that have already adopted the amendments in ASU 2018-07, the amendments in ASU 2019-08 are effective in 2020 for calendar-year entities. For entities that have not yet adopted the amendments in ASU 2018-07, the amendments are effective in 2020 for calendar-year public business entities or in 2020 for calendar-year nonpublic entities and 2021 for interim periods.
Download the 2021 version of Share-based payments: Navigating the guidance in ASC 718