8.6 Measurement
ASC 718-50
General
30-1 Paragraph 718-10-30-6 states that the objective of the fair value measurement method is to estimate the fair value of the equity instruments, based on the share price and other measurement assumptions at the grant date, that are issued in exchange for providing goods or rendering services. Estimating the fair value of equity instruments at the grant date, which are issued in exchange for employee services, also applies to the fair value measurements associated with grants under a compensatory employee share purchase plan and is the basis for the approach described in Example 1, Case A (see paragraph 718-50-55-10).
Look-Back Plans
30-2 Many employee share purchase plans with a look-back option have features in addition to or different from those of the plan described in Example 1, Case A (see paragraph 718-50-55-10). For example, some plans contain multiple purchase periods, others contain reset mechanisms, and still others allow changes in the withholding amounts or percentages after the grant date (see Example 1, Cases B through E [see paragraphs 718-50-55-22 through 55-33]).
30-3 In some circumstances, applying the measurement approaches described in this Subtopic at the grant date may not be practicable for certain types of employee share purchase plans. Paragraph 718-20-35-1 provides guidance on the measurement requirements if it is not possible to reasonably estimate fair value at the grant date.
Under a compensatory ESPP, the measurement objective is the same as that
described in ASC 718-10, which is to estimate the fair-value-based measure of the
equity instruments on the grant date. Chapter 4 of this Roadmap discusses the
measurement objective outlined in ASC 718-10 in detail. In addition, see Section 8.9 for examples of
the measurement of plans with look-back features.