Proposed ASU on share-based payment practical expedient

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

Related content

Handbook: Share-based payment