4.4 Measurement Date
For equity-classified awards, the measurement date is the grant date (i.e., the
date on which the measurement of the award is fixed). As discussed in Chapter 3, the service
inception date may precede the grant date for both employee and nonemployee awards.
As a result, even though an entity may begin to record compensation cost before the
grant date, the fair-value-based measure of an equity-classified award is not fixed
until the grant date. In periods before the grant date, compensation cost is
remeasured on the basis of the award’s fair-value-based measure at the end of each
reporting period to the extent that service has been rendered in proportion to the
total requisite service period. See Section 3.6.4 for guidance on accounting for a
share-based payment award when the service inception date precedes the grant
date.
For liability-classified awards, the ultimate measurement date is the settlement
date. That is, unlike equity-classified awards, liability-classified awards are
remeasured at their fair-value-based measure in each reporting period until
settlement. The changes in the fair-value-based measure of the liability-classified
award at the end of each reporting period are recognized as compensation cost either
immediately or over the remaining vesting period (or both), depending on the
employee’s requisite service period or the nonemployee’s vesting period. See
Chapter 7 for
further discussion of the accounting for liability-classified awards.