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Accounting for Stock Plans

The grant of share based compensation typically comes with accounting implications. In the United States, under the application of generally accepted accounting principles (GAAP), stock compensation is subject to fair value accounting under Accounting Standard Codification 718 (ASC 718). 

Explore accounting requirements and practices for a variety of equity award types, including stock options, employee stock purchase plans and restricted stock awards and units.

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Overview of Stock Plan Accounting

ASC 718 is a U.S. accounting standard that applies to all forms of stock-based compensation, including nonqualified and incentive stock options, employee stock purchase plans, restricted stock awards and units, phantom stock, stock appreciation rights, and any other compensatory arrangements that involve company stock. 

Under ASC 718, all forms of stock compensation are treated as an expense to the company, subject to some general principles that distinguish between equity and liability treatment. For a full overview of the accounting standard, view our resource "Accounting for Equity Compensation in the United States."


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