News Release 06/20/18
FASB Issues Simplifications to Accounting for Nonemployee Share-Based Payments
Norwalk, CT, June 20, 2018—The Financial Accounting Standards Board (FASB)
today issued an Accounting Standards Update (ASU) intended to reduce
cost and complexity and to improve financial reporting for nonemployee
The ASU expands the scope of Topic 718, Compensation—Stock Compensation
(which currently only includes share-based payments to employees) to
include share-based payments issued to nonemployees for goods or
services. Consequently, the accounting for share-based payments to
nonemployees and employees will be substantially aligned. The ASU
supersedes Subtopic 505-50, Equity—Equity-Based Payments to Non-Employees.
"Stakeholders recommended that the FASB improve the accounting for
nonemployee share-based payments to reduce cost and complexity to apply
the guidance, while improving the financial reporting for these
transactions" said FASB Chairman Russell G. Golden.
"This standard will make it easier for companies to account for the
share-based payments they provide to service providers, suppliers, and
other people that are not employees."
The accounting for nonemployee share-based payment transactions was identified as an area for simplification through:
The amendments in this ASU are effective for public companies for fiscal
years beginning after December 15, 2018, including interim periods
within that fiscal year. For all other companies, 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, but no earlier than a companyâ€™s adoption
date of Topic 606, Revenue from Contracts with Customers.
- Outreach for the Simplification Initiative
- Ongoing dialogue with the Private Company Council (PCC) about making improvements to the accounting for share-based payments, and
- The August 2014 Post-Implementation Review Report on FASB Statement No. 123 (revised 2004), Share-Based Payment.
More information about the ASU, including a FASB in Focus overview, is available at www.fasb.org.