NORWALK, Conn.--(EON: Enhanced Online News)--The Financial Accounting Standards Board (FASB) today issued a proposed Accounting Standards Update (ASU) intended to reduce cost and complexity and to improve financial reporting for nonemployee share-based payments. Stakeholders are encouraged to review and provide comments on the proposal by June 5, 2017.
The proposed ASU would expand the scope of Topic 718, Compensation—Stock Compensation, which currently only includes payments to employees, to include payments for goods and services to nonemployees. Consequently, the accounting for share-based payments to nonemployees and employees would be similar. The proposed ASU would supersede Subtopic 505-50, Equity—Equity Based Payments to Non-Employees.
The accounting for nonemployee share-based payment transactions was identified as an area for simplification through:
- Ideas submitted to the FASB as part of the Board’s Simplification Initiative
- The Private Company Council’s (PCC) ongoing dialogue about making improvements to accounting for share-based payments
- The Post-Implementation Review of FASB Statement No. 123(R), Share-Based Payment.
Stakeholders recommended that the FASB improve the accounting for nonemployee share-based payments to reduce cost and complexity, while improving the financial reporting for these transactions.
The FASB will determine an effective date after redeliberating input received during the comment period.
About the Financial Accounting Standards Board
Established in 1973, the FASB is the independent, private-sector organization, based in Norwalk, Connecticut, that establishes financial accounting and reporting standards for public and private companies and not-for-profit organizations that follow Generally Accepted Accounting Principles (GAAP). The FASB is recognized by the Securities and Exchange Commission as the designated accounting standard setter for public companies. FASB standards are recognized as authoritative by many other organizations, including state Boards of Accountancy and the American Institute of CPAs (AICPA). The FASB develops and issues financial accounting standards through a transparent and inclusive process intended to promote financial reporting that provides useful information to investors and others who use financial reports. The Financial Accounting Foundation (FAF) supports and oversees the FASB. For more information, visit www.fasb.org.