CHAPTER 26
COMPENSATION—STOCK COMPENSATION
Perspective and Issues
Definitions of Terms
Concepts, Rules, and Examples
Accounting for Share-Based Payments
ASC 718: Detailed Explanation
Scope
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
Background
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
PERSPECTIVE AND ISSUES
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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