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

Related content

KPMG’s Handbook: Share-based payment

 

 

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