14.2 Overview

The guidance in ASC 718 on measuring and classifying share-based consideration payable to a customer requires entities to calculate such amounts on the grant date by using a fair-value-based measure. The grant date is the date on which the grantor (the entity) and the grantee (the customer) reach a mutual understanding of the key terms and conditions of the share-based consideration. The result is reflected as a reduction of the transaction price and, therefore, of revenue in accordance with the guidance in ASC 606 on consideration payable to a customer. After initial recognition, the measurement and classification of share-based consideration payable to a customer continues to be subject to ASC 718 unless (1) the award of such consideration is subsequently modified when vested and (2) the grantee is no longer a customer.