FASB to Propose That Private Companies Use Alternative in Calculating Equity Share-Based Rewards

Chris Gaetano
Published Date:
Aug 9, 2021

The Financial Accounting Standards Board (FASB) plans to propose the use of a practical expedient for private companies to determine the current price input of equity-classified share-based awards issued to both employees and nonemployees,  Accounting Today reported. The FASB board approved the decision, which was put forth by the Private Company Council, during its most recent meeting. 

The idea is to allow a nonpublic entity to elect the practical expedient for equity-classified share-based awards issued to both employees and nonemployees granted or modified during fiscal years beginning on or after Dec. 15, 2021, and interim periods in the following year. The expedient is based on the methodology outlined in Sec. 409A of the tax code. Early adoption, including adoption within an interim period, would be permitted for financial statements that have not yet been issued or made available for issuance as of the issuance date of the final update.

FASB staff will still need to compose a formal exposure draft before the measure can be voted on. 

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