Defining Issues | August 2020

 

Insight

Proposed ASU on share-based payment practical expedient

FASB proposes a practical expedient for nonpublic entities valuing share option awards.

Regina Croucher

Regina Croucher

Partner, Dept. of Professional Practice, KPMG US

+1 816-802-5840

Holly Driscoll

Holly Driscoll

Senior Manager, Dept. of Professional Practice, KPMG US

+1 212-954-2103

KPMG reports on a proposed ASU which provides a practical expedient for nonpublic entities to determine the fair value of their share option awards.

Applicability

  • Nonpublic entities that provide share option awards to employees and nonemployees

Relevant dates

August 17, 2020 – FASB issued proposed ASU

October 1, 2020 – Comments due on proposed ASU

Key impacts

  • The FASB’s proposals of the Private Company Council (PCC) would give nonpublic entities a practical expedient to determine the value of share-based payment option awards. 
  • Under the proposals, the current price input of share option awards can be obtained using a valuation in accordance with the ‘presumption of reasonableness’ provisions of Section 409A of the US Internal Revenue Code.
  • The proposals limit the practical expedient to equity-classified share option awards only and would apply on an award-by-award basis.

Report contents

  • Applicability
  • Key facts and impacts
  • Background
  • Proposed guidance
  • Effective dates and transition
  • Next steps

Subscribe to our newsletter

Receive timely updates on accounting and financial reporting topics from KPMG.

Receive timely updates on accounting and financial reporting topics from KPMG.

ARO

Use our Accounting Research Online for financial reporting resources.

Use our Accounting Research Online for financial reporting resources.