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.
On February 3, 2006, the FASB released its fourth FASB Staff Position (FSP) providing interpretive and implementation guidance on the provisions of FASB Statement 123(R).
As more and more companies grant performance equity, understanding the valuation and accounting impacts of these awards becomes more and more essential. This article will outline the key points to consider when accounting for performance equity awards.
This memo compares the US GAAP and IASB treatment of awards that are no longer subject to service-based vesting conditions but remain subject to a performance condition.
Performance Award Accounting Follow-up
Performance Award Accounting
Understanding time consuming accounting and legal practices in equity compensation
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Get practical guidance on how to properly account for award forfeitures in your financial statements!
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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.
Accounting for Auto-Enrollment in ESPP
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