FASB Releases ASU on Share-Based Consideration Payable to a Customer

The FASB has released Accounting Standards Update (ASU) No. 2025-04, Clarifications to Share-Based Consideration Payable to a Customer. The purpose of the ASU is to reduce diversity in practice and improve existing guidance, primarily by revising the definitionof a “performance condition” and eliminating a forfeiture policy election for service conditions associated with share-based consideration payable to a customer. In addition, the ASU clarifies that the guidance in ASC 606 on the variable consideration constraint does not apply to share-based consideration payable to a customer “regardless of whether an award’s grant date has occurred” (as determined under ASC 718).

For more information, see the press release on the FASB’s Web site.