Chapter 4 — Foreign Currency Transactions

4.12 Share-Based Payments

Under ASC 718, share-based payment awards are classified as either liabilities or equity. As summarized in the table below, the foreign currency effects of share-based payment awards that are denominated in a foreign currency depend on the classification of the award.

Classification Under ASC 718	Measurement Under ASC 718	Foreign Currency Effects
Liability	Generally, remeasured as of each reporting date at fair value until the award is settled.	The fair value of the award should be determined in the functional currency by using the current exchange rate. Fluctuations in the fair-value-based measure of the liability award are recorded as increases or decreases in compensation cost, either immediately or over the remaining service period, depending on the vested status of the award. Compensation cost is recorded in the functional currency by using the weighted-average exchange rate for the reporting period. Upon exercise, proceeds are measured at the spot rate in effect at that time, with any difference recorded in equity.
Equity	Generally, measured on the grant date; not subsequently remeasured.	Compensation cost is recorded in the functional currency by using the weighted-average exchange rate for the reporting period. Upon exercise, proceeds are measured at the spot rate in effect at that time, with any difference recorded in equity.

Confidential and Proprietary — for Use Solely by Authorized Personnel

This publication provides comprehensive guidance; however, it does not address all possible fact patterns, and the guidance is subject to change. Consult a Deloitte & Touche LLP professional regarding your specific issues and questions.