Deloitte
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Chapter 2 — Scope

2.1 General

2.1 General

ASC 718-10
Overall Guidance
15-1 The Scope Section of the Overall Subtopic establishes the pervasive scope for all Subtopics of the Compensation — Stock Compensation Topic. Unless explicitly addressed within specific Subtopics, the following scope guidance applies to all Subtopics of the Compensation — Stock Compensation Topic, with the exception of Subtopic 718-50, which has its own discrete scope.
Entities
15-2 The guidance in the Compensation — Stock Compensation Topic applies to all entities that enter into share-based payment transactions.
15-3 The guidance in the Compensation — Stock Compensation Topic applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in the grantor’s own operations or provides consideration payable to a customer by issuing (or offering to issue) its shares, share options, or other equity instruments or by incurring liabilities to an employee or a nonemployee that meet either of the following conditions:
  1. The amounts are based, at least in part, on the price of the entity’s shares or other equity instruments. (The phrase at least in part is used because an award of share-based compensation may be indexed to both the price of an entity’s shares and something else that is neither the price of the entity’s shares nor a market, performance, or service condition.)
  2. The awards require or may require settlement by issuing the entity’s equity shares or other equity instruments.
Pending Content (Transition Guidance: ASC 718-10-65-17)
15-3 The guidance in the Compensation — Stock Compensation Topic applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in the grantor’s own operations or provides consideration payable to a customer by either of the following:
  1. Issuing (or offering to issue) its shares, share options, or other equity instruments to an employee or a nonemployee
  2. Incurring liabilities to an employee or a nonemployee that meet either of the following conditions:
    1. The amounts are based, at least in part, on the price of the entity’s shares or other equity instruments. (The phrase at least in part is used because an award of share-based compensation may be indexed to both the price of an entity’s shares and something else that is neither the price of the entity’s shares nor a market, performance, or service condition.)
    2. The awards require or may require settlement by issuing the entity’s equity shares or other equity instruments.
15-3A Paragraphs 323-10-25-3 through 25-5 provide guidance on accounting for share-based compensation granted by an investor to employees or nonemployees of an equity method investee that provide goods or services to the investee that are used or consumed in the investee’s operations.
Pending Content (Transition Guidance: ASC 718-10-65-17)
15-3B An entity shall apply the guidance in paragraph 718-10-15-3 to determine whether a profits interest or similar award is within the scope of this Topic. Paragraphs 718-10-55-138 through 55-148 illustrate how the guidance in paragraph 718-10-15-3 applies to common features in a profits interest or similar award.
15-5 The guidance in this Topic does not apply to transactions involving share-based payment awards granted to a lender or an investor that provides financing to the issuer. However, see paragraphs 815-40-35-14 through 35-15, 815-40-35-18, 815-40-55-49, and 815-40-55-52 for guidance on an issuer’s accounting for modifications or exchanges of written call options to compensate grantees.
  1. Subparagraph superseded by Accounting Standards Update No. 2018-07.
  2. Subparagraph superseded by Accounting Standards Update No. 2019-08.
  3. Subparagraph superseded by Accounting Standards Update No. 2019-08.
15-5A Share-based payment awards granted to a customer shall be measured and classified in accordance with the guidance in this Topic (see paragraph 606-10-32-25A) and reflected as a reduction of the transaction price and, therefore, of revenue in accordance with paragraph 606-10-32-25 unless the consideration is in exchange for a distinct good or service. If share-based payment awards are granted to a customer as payment for a distinct good or service from the customer, then an entity shall apply the guidance in paragraph 606-10-32-26.
15-6 Paragraphs 805-30-30-9 through 30-13 provide guidance on determining whether share-based payment awards issued in a business combination are part of the consideration transferred in exchange for the acquiree, and therefore in the scope of Topic 805, or are for continued service to be recognized in the postcombination period in accordance with this Topic.
15-7 The guidance in the Overall Subtopic does not apply to equity instruments held by an employee stock ownership plan.
Pending Content (Transition Guidance: ASC 805-60-65-1)
15-8 Paragraph 805-60-25-8 provides guidance on determining whether share-based payment awards issued by a joint venture upon formation are part of the joint venture formation transaction and, therefore, are within the scope of Subtopic 805-60, or are for continued service to be recognized in the postformation period in accordance with this Topic.

Footnotes

1
ASC 718 refers to restricted stock (and RSUs) as nonvested shares (and nonvested share units).
2
ESOPs are within the scope of ASC 718-40 and are not covered in this Roadmap. ASC 718-10-20 defines an ESOP as “an employee benefit plan that is described by the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code of 1986 as a stock bonus plan, or combination stock bonus and money purchase pension plan, designed to invest primarily in employer stock. Also called an employee share ownership plan.” Entities should continue to account for ESOPs in accordance with ASC 718-40 or SOP 76-3. Although SOP 76-3 was not included in the Codification, entities may continue to apply it to shares acquired by ESOPs on or before December 31, 1992.