On the Radar — Share-Based Payment Awards

Published on: 11 Aug 2022

To incentivize employee performance and align the interests of employees and shareholders, entities often grant share-based payment awards — including stock options, restricted stock, restricted stock units, stock appreciation rights, and other equity-based instruments — in exchange for services. To a lesser extent, entities also grant such awards to compensate vendors for goods and services or as sales incentives to customers.

ASC 718 provides the accounting guidance on share-based payment awards, which requires entities to use a fair-value-based measure when recognizing the cost associated with these awards in the financial statements. Some of the more challenging aspects of applying this guidance are addressed in this publication.


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