Defining Issues | June 2018
FASB simplifies the accounting for share-based payments to nonemployees
KPMG reports on ASU 2018-07, which more closely aligns the accounting for employee and nonemployee share-based payments. However, differences remain in the accounting for attribution and a contractual term election for valuing nonemployee equity share options.
Applicability
- All companies that enter into nonemployee share-based payment transactions
Relevant dates
Effective date:
Annual periods – Fiscal years beginning after
Interim periods – In fiscal years beginning after
Public business entities
December 15, 2018
December 15, 2018
All other entities
December 15, 2019
December 15, 2020
Early adoption allowed? Yes, but no earlier than the company’s adoption date of ASC 606, Revenue from Contracts with Customers
Key impacts
- The ASU allows companies to account for share-based payment transactions with nonemployees in the same way as share-based payment transactions with employees
- Differences remain in the accounting for attribution and a contractual term election for valuing nonemployee equity share options
- The ASU includes elections that offer relief to nonpublic companies when measuring nonemployee equity share options
- Entities transition using the modified retrospective approach with fair value measurement of unsettled liability-classified nonemployee awards and equity awards where a measurement date has not been established
Applicability
- Key facts and impacts
- Attribution of nonemployee awards
- Valuation of nonemployee equity share options
- Forfeitures
- Nonpublic company effective date election
- Effective date and transition
Related content
KPMG’s Handbook: Accounting for share-based payments
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