Appendix E — Roadmap Updates for 2023
The tables below summarize the
substantive changes made in the 2023 edition of this Roadmap.
New Content
Section
|
Title
|
Description
|
---|---|---|
Employees of Pass-Through Entities
|
Added guidance on whether an individual
qualifies as an employee of a pass-through entity (e.g.,
partnership, limited liability corporation, limited
liability partnership) in the context of the ASC master
glossary definition of “share-based payment
arrangements.”
| |
SEC’s Final Rule on the Recovery of
Erroneously Awarded Compensation (“Clawback
Policies”)
|
Added guidance to reflect the SEC’s
final rule on the recovery of erroneously awarded
compensation, which requires issuers to “claw back”
excess compensation for the three fiscal years before
the determination of a restatement regardless of whether
an executive officer had any involvement in the
restatement.
| |
Grant Date
|
Added guidance on determining the grant
date for ESPPs.
| |
Classification
|
Added guidance on determining the
classification of ESPP awards.
|
Amended Content
Section
|
Title
|
Description
|
---|---|---|
Added discussions of the FASB’s proposed ASU on the scope
application of profits interest awardsand the SEC’s
final rule related to the recovery of erroneously
awarded compensation (“clawbacks”).
| ||
Profits Interests and Other Awards
Issued by Pass-Through Entities
|
Added Changing Lanes to acknowledge the FASB’s
proposed ASU on the scope application of profits
interest awards.
| |
Communication Date
|
Expanded discussion of considerations
related to determining whether a recipient has the
ability to negotiate the key terms and conditions of an
award. Clarified that the term “relatively short time
period” applies only to determining the communication
date of a share-based payment award and should not be
applied to other aspects of ASC 718.
| |
Service Condition
|
Clarified that an entity would make its
accounting policy election for forfeitures separately
for employee and nonemployee awards.
| |
Estimating Forfeitures
|
Expanded discussion to include
considerations for entities that elect to estimate
forfeitures related to recognizing compensation that is
at least equal to the grant-date fair-value-based
measure of the vested portion of that award.
| |
Performance Condition
|
Added ESG targets to the examples of
performance conditions.
| |
Graded Vesting for Employee Awards
|
Clarified that an entity’s use of either
a straight-line or an accelerated attribution method
represents an accounting policy election that should be
applied consistently to all similar awards, including
awards that have been modified.
| |
Only One Condition Must Be Met —
Employee Awards
|
Added Example 3-26
to illustrate an award that vests upon the satisfaction
of either a performance condition or a market
condition.
| |
Liquidity Event and Target IRR
|
Clarified the guidance for certain
awards that may vest only if (1) a target IRR to
shareholders is achieved while the grantee is employed
and (2) the IRR is based on the payment of sufficient
proceeds tendered as a result of either distributions to
shareholders or the sale of sufficient equity.
| |
Multiple Performance Conditions and
Multiple Service Periods
|
Expanded the discussion of Case A in ASC
718-10-55-94 (regarding an award with multiple annual
performance targets) to clarify that when a performance
condition in one particular year does not affect the
outcome of any preceding or subsequent period, each
tranche should be accounted for as a separate award with
its own service inception date.
| |
Cash Loans Through Nonrecourse Notes
|
Added Example 3-38
to illustrate the accounting for cash loaned to an
employee in exchange for a nonrecourse note secured by
shares.
| |
Capitalization of Compensation Cost
|
Updated to list examples of other
sections of U.S. GAAP under which the capitalization of
share-based compensation costs is required.
| |
Fair-Value-Based Measurement
|
Clarified that although the valuation of
share-based payments that are subject to ASC 718 is
excluded from the scope of ASC 820, entities should
apply the measurement guidance in ASC 820 unless it is
inconsistent with the guidance in ASC 718.
| |
Current Market Price of the Underlying Share
|
Expanded the discussion of the guidance in SAB 120 to
note that a material increase in the market price of an
entity’s shares upon the release of “material non-public
information within a short period of time after the
measurement date” indicates that “market participants
would have considered an adjustment to the observable
market price on the measurement date.”
| |
Repurchase Features — Noncontingent Puttable Stock
Awards
|
Added Example 5-9 to illustrate the
accounting for the repurchase of shares at fair value
more than six months from the date on which stock
options were exercised and the shares became
outstanding.
| |
Substantive Terms
|
Added Example 5-18 to illustrate the
impact of an entity’s ability to deliver shares on the
substantive terms and classification of the award.
| |
SEC Guidance on Temporary Equity
|
Updated to provide examples of situations in which awards
would be classified in temporary equity.
| |
Replacement of Acquiree Awards
|
Updated to discuss circumstances in which (1) the terms
of the acquiree’s award are silent or give the acquiree
discretion regarding the award’s treatment upon a
change-in-control event and (2) the acquiree’s award is
replaced. In such cases, the acquirer should account for
the replacement award as if the acquirer were obligated
to replace it.
| |
Changes in Forfeiture Estimates or Actual Forfeitures in
the Postcombination Period
|
Expanded the discussion of View B (reversal of
compensation cost for the acquisition-date
fair-value-based measure of the awards not expected to
vest or that do not actually vest, regardless of whether
that measure was attributed to precombination or
postcombination vesting) to analogize to ASC
805-30-55-13, which describes changes in the
fair-value-based measure of liability-classified awards
after the acquisition date.
| |
Changes in the Probability of Meeting a Performance
Condition in the Postcombination Period
|
Clarified that a change in the expected outcome of a
performance condition from improbable to probable should
result in the accrual of compensation cost on the basis
of the acquisition-date fair-value-based measure of all
awards expected to vest.
| |
Modification to the Original Terms of the Awards to Add a
Change-in-Control Provision in Contemplation of a
Business Combination
|
Expanded the discussion of “in contemplation of” to
indicate that (1) a modification during the negotiation
of a business combination is presumed to benefit the
acquirer and (2) a modification before negotiations have
been entered into is presumed to benefit the
acquiree.
|