FASB Issues Proposal to Simplify Accounting for Non-employee Share-Based Payments

April 2017

The US Financial Accounting Standards Board (FASB) has proposed an amendment to the FASB Accounting Standards Codification to simplify accounting for share-based compensation paid to non-employees. The Proposed Accounting Standards Update (ASU), Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, is intended to reduce cost and complexity and to improve financial reporting for non-employee share-based payments. Comments are due by 5 June 2017.

Under the proposal, the scope of Topic 718, Compensation—Stock Compensation, which currently applies only to share-based compensation payments to employees would be extended to include payments for goods and services to non-employees. The proposed ASU would supersede the current US GAAP provision governing share-based payments to non-employees under Subtopic 505-50, Equity—Equity Based Payments to Non-Employees.

The proposed ASU is available on this link.

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