Navigating ASC 718’s employee stock compensation guidance

Download RFP
This Grant Thornton guide, Share-based payments: Navigating the guidance in ASC 718, presents accounting guidance on share-based arrangements codified in ASC 718, Compensation – Stock Compensation.

The overarching principle of ASC 718 is to account for the fair value of employee awards as compensation expense in the financial statements. ASC 718 applies to all entities that enter into share-based transactions with their employees, where employee services are exchanged for issued equity instruments or for incurred liabilities. The applicable compensation must be for an amount based, at least partly, on either the price of the entity’s shares or other equity instruments, or the compensation could require a settlement through issuing the entity’s shares or other similar instruments.

In June 2018, the FASB issued ASU 2018-07, Improvements to Nonemployee Share-Based Payment Accounting, to simplify the accounting for nonemployee awards by expanding the scope of ASC 718 to include share-based payment transactions involving nonemployees. Grant Thornton has updated Share-based payments – Navigating the guidance in ASC 718 to include the accounting guidance for share-based payments under ASC 718 for nonemployee awards both before and after an entity adopts the amendments in ASU 2018-07. The guide now also features guidance for evaluating the impact of share-based payments on earnings per share, as well as presentation and disclosure guidance for share-based payments.

Grant Thornton’s updated guide provides a general summary of ASC 718 that business leaders can use as a reference when discussing the proper application of its provisions with trained professional advisers.


Sheri Fabian
Partner, Accounting Principles Group
T +1 732 516 5543