Perspective and Issues

Definitions of Terms

Concepts, Rules, and Examples

Accounting for Share-Based Payments

ASC 718: Detailed Explanation


Measurement of compensation cost from share-based payment arrangements with employees

Recognizing compensation

Modified awards

Accounting for Employee Stock Options under ASC 718

Option fair value calculations

Accounting for Stock Appreciation Rights and Tandem Plans


Stock appreciation rights and similar instruments

Stock SARs

Tandem plans

Modifications of Awards of Equity Instruments

Accounting for Income Tax Effects of Share-Based Compensation

Other ASC 718 Matters

Share options with performance conditions and/or market conditions

Other modifications of share option awards

Other types of share-based compensation awards covered in ASC 718

Reload feature and reload option

Effect of employer payroll taxes

Payments in lieu of dividends on options

Disclosure requirements under ASC 718

Accounting for Stock Issued to ESOPs


The Financial Accounting Standards Board (FASB) has concluded that the economic substance of stock-based compensation is to provide compensation, and that results in an expense that should logically be reported by the entity (using the fair value method of accounting); this view appears in Accounting Standards Codification (ASC) 718, Compensation—Stock Compensation, which imposes fair value accounting on almost all share-based payment plans.

ASC ...

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