Share-based payment transactions are measured on the basis of the fair value (or in certain situations, the calculated value or intrinsic value) of the equity instrument issued. As noted in Section 1.1, ASC 718 refers to a “fair-value-based” method for measuring the value of the share-based payment. Conceptually, the fair value determined under this method is not fair value as defined in ASC 820, which explicitly excludes share-based payments from its scope. Although fair value measurement techniques are used in the fair-value-based measurement method, it specifically excludes the effects of vesting conditions and other types of features (e.g., clawback provisions) that would be included in a fair value measurement that is based on ASC 820. Therefore, when the term “fair value” is used in ASC 718 and in this Roadmap, it refers to a fair-value-based measurement determined in accordance with the requirements of ASC 718.
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