An updated edition of A guide to accounting for stock compensation is now available. The guide is intended to assist companies in understanding and analyzing the accounting for share-based payments with employees and nonemployees under the Financial Accounting Standards Board's (FASB) Accounting Standards Codification (ASC) 718, Compensation—Stock Compensation. ASC 718 addresses the accounting for various types of equity-based awards issued as compensation for goods or services.
The June 2024 edition of our guide has been updated to incorporate guidance from the following Accounting Standards Updates (ASUs) issued by the FASB:
- ASU 2024-01, Compensation – Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards
- ASU 2023-05, Business Combinations – Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement
This edition has also been updated to add (i) Appendix C, which summarizes the complete list of changes to the guide since the last edition, (ii) reference the SEC’s final rule requiring the disclosure of clawback policies, (iii) an example of how expense should be recognized when an award is granted to a nonemployee in exchange for consulting services, and (iv) guidance on the accounting for a modification that changes the classification of an award from liability to equity and results in a decrease in the fair value of the award.
