FASB Updates Accounting Rules for Stock Compensation

From the FASB’s April 16, 2010 e-mail release:

Today the FASB issued Accounting Standards Update No. 2010-13, Compensation—Stock Compensation (Topic 718): Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades (a consensus of the FASB Emerging Issues Task Force).

The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010.

Link to the Accounting Standards Update: http://www.fasb.org/cs/ContentServer?c=Document_C&pagename=FASB%2FDocument_C%2FDocumentPage&cid=1176156807475

Key takeaways:

  • Applies to employee share-based payment awards with an exercise price denominated in the currency of a market in which a substantial portion of the entity’s equity securities trades that differs from the functional currency of the employer entity or payroll currency of the employee.
  • The amendments clarify that a share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity’s equity securities trades should not be considered to contain a condition that is not a market, performance, or service condition. Therefore, such an award should not be classified as a liability if it otherwise qualifies as equity.
  • The amendments to Topic 718 will be effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010.
Print Friendly, PDF & Email