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Chapter 7 — Common Issues Related to Cash Flows

7.3 Stock Compensation

7.3 Stock Compensation

Because the receipt of employee services in exchange for a share-based payment award is a noncash item, the granting of such awards is not presented in the statement of cash flows.

Footnotes

2
ASU 2016-09 removed ASC 230-10-45-14(e), which stated that the following was a cash inflow from financing activities: “Cash retained as a result of the tax deductibility of increases in the value of equity instruments issued under share-based payment arrangements that are not included in the cost of goods or services that is recognizable for financial reporting purposes. For this purpose, excess tax benefits shall be determined on an individual award (or portion thereof) basis.” Such excess tax benefits were the same amounts that an entity was required to show as an operating cash outflow in accordance with ASC 230-10-45-17(c), which the ASU also removed.
3
The amendments in ASU 2018-07 are effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, provided that the adoption date is no earlier than the date on which an entity adopts ASC 606.