Defining Issues | November 2019
FASB affirms decisions on accounting for share-based consideration payable to a customer
KPMG reports on ASU 2019-08 on accounting for share-based consideration payable to a customer. The ASU clarifies that share-based consideration payable to a customer is measured under stock compensation guidance.
Applicability
ASU 2019-08, ASC 718, ASC 606
- All companies with share-based consideration payable to a customer
Effective dates
| Public business entities plus other entities that have adopted ASU 2018-07 | All other entities | |
|---|---|---|
| Annual periods – In fiscal years beginning after | Dec. 15, 2019 | Dec. 15, 2019 |
| Interim periods – In fiscal years beginning after | Dec. 15, 2019 | Dec. 15, 2020 |
| Early adoption allowed? | Yes, for financial statements that have not yet been issued, but not earlier than the adoption of ASU 2018-07 | |
Key impacts
An entity with share-based payment awards to customers:
- Applies ASC 718 to measure the awards and determines whether the awards are classified as equity or liabilities.
- Measures the awards at their grant-date fair value, and records the awards as a reduction to revenue or as an expense based on the revenue guidance.
- Estimates and adjusts the fair value of the awards each reporting period until a grant date is established, if a company is required to estimate the transaction price in the revenue guidance before a grant date is established under ASC 718.
Report contents
- Applicability
- Key facts and impacts
- Background
- New guidance
- Effective dates and transition
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