Defining Issues | October 2021

 

Insight

Share-based payment private company practical expedient

FASB finalizes a practical expedient for nonpublic entities valuing share-based payment awards.

Regina Croucher

Regina Croucher

Partner, Dept. of Professional Practice, KPMG US

+1 816-802-5840

The ASU provides a share-based payment practical expedient for equity-classified awards.

Applicability

  • Nonpublic entities that provide share-based payment awards to employees and nonemployees

Relevant dates

  • October 25, 2021 – FASB issued final ASU
Effective dates Private companies

Annual periods – Fiscal years beginning after       

Dec. 15, 2021

Interim periods – In fiscal years beginning after 

Dec. 15, 2022

Early application allowed?

Yes, for interim or annual financial statements that have not been issued (or made available for issuance)

 

Key impacts

  • The FASB has provided a practical expedient that allows a private company to determine, for equity-classified share-based payment awards, the share price for restricted stock awards and the current price input for option-based awards, using a ‘reasonable application of a reasonable valuation method’.
  • The practical expedient does not change the measurement objective of ASC 718.

Report contents

  • Applicability
  • Fast facts, impacts, actions
  • Background
  • Share price practical expedient for equity-classified awards
  • Effective dates and transition

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