This site uses cookies to provide you with a more responsive and personalised service. By using this site you agree to our use of cookies. Please read our cookie notice for more information on the cookies we use and how to delete or block them.
The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected. Please turn off compatibility mode, upgrade your browser to at least Internet Explorer 9, or try using another browser such as Google Chrome or Mozilla Firefox.

"Convergence" on key share-based payment decisions

  • FASB (old) Image

24 Jun 2003

Both the IASB and the US FASB have projects on share-based payments.

A Decision Summary (PDF 82k) prepared by the FASB for today's meeting of its Advisory Council summarises the two boards' decisions to date and concludes that "the IASB and the FASB are converged with respect to accounting for equity-settled employee stock-based compensation transactions.... The two Boards are converged in the sense that if the IASB's proposed guidance and the FASB's tentative decisions do not change, the final standards would be converged." The decision summary notes the following key decisions made to date:

  • Recognition. Goods or services received in exchange for stock-based compensation result in a cost that should be recognised in the income statement as an expense when the goods or services are consumed by the enterprise.
  • Measurement Attribute. The measurement attribute for an exchange involving stock-based compensation is fair value.
  • Measurement Objective. The measurement objective for equity-settled awards is to determine the fair value of the goods or services received in the exchange, which should be based on (a) the fair value of the goods or services received or (b) the grant-date fair value of the equity instruments issued (that is, modified grant date measurement), whichever is more reliably measurable.
  • Attribution. Compensation cost should be recognised over the service period using the attribution method in FASB Statement 123, Accounting for Stock-Based Compensation, rather than by the units-of-service attribution method proposed in IASB ED 2, Share-based Payment. In May 2003 the IASB decided to move to the SFAS 123 model.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.