: Companies must "expense options," meaning they record the value of the equity granted as an expense on their income statement over the period the recipient provides the service (the vesting period). Scope and Applicability
: It applies to all share-based payment transactions with both employees and nonemployees .
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: Recent updates, such as ASU 2021-07 , provide "practical expedients" allowing private companies to use simplified methods to determine the current price of their underlying shares, rather than more complex public-market valuations.
: This includes standard employees, certain leased employees, and nonemployee directors. : Companies must "expense options," meaning they record
: The core requirement is to recognize the cost of services received in exchange for share-based awards based on the fair value of those awards at the grant date.
For detailed technical guidance, you can refer to the official FASB Accounting Standards Codification (ASC) 718. For financial advice, consult a professional
: It generally does not apply to share-based payments used for financing the issuer or those granted as part of a contract with a customer (which falls under Topic 606 ). Recent Updates and Simplifications