Written for readers without an accounting background, this article provides a summary of the treatment of stock compensation under US GAAP. Also includes highlights of differences between the US GAAP and IFRS with respect to stock compensation.
On March 13, 2014, in response to a persistent issue regarding the recognition of expense for performance awards, the Financial Accounting Standard Board's ("FASB") Emerging Issues Task Force ("EITF") determined that a performance target which can be achieved after an employee provides the requisite service, is a performance condition that affects the vesting of the awards (not a condition that can affect the grant date fair value of the awards). Therefore, compensation cost should be recognized if it is probable that the performance condition will be achieved. This EITF ruling narrows the scope of acceptable accounting practices, only allowing the use of the performance condition approach.
This GRIST was revised to provide further explanation of the old APB 25 and FAS 123 "grant date" definition and the changes in FAS 123(R) in the Grant date definition and Existing practice and new interpretation sections
Are you recognizing more expense than you need to for your ESPP? This article by Infinite Equity looks at additional factors to consider when valuing ESPPs.
Four ways in which your ESPP might be less expensive than you think.
SEC Comments on Stock Compensation
Key trends in performance award design
Find out how this innovation in award design can be a win-win for your company and shareholders!
Learn about the newest trend in stock compensation!
The SEC staff confirmed the latitude in Statement 123R’s provisions on selecting models for valuing share options and clarified other positions on accounting and disclosure for share based-payment arrangements.1 New Staff Accounting Bulletin 107 permits registrants to choose from different valuation models to estimate the fair value of share options, assuming consistent application, and also provides guidance on developing assumptions used in valuing employee share options, on related MD&A disclosures, and on the interaction between Statement 123R and ASR 268 and other SEC literature.
SEC guidance on implementation and valuation under SFAS No. 123(R)
Post a Question
Find an Expert