FASB proposes guidance for measuring share-based payments to customers

FASB issued a proposal that would provide explicit guidance on how to measure share-based payments to a customer. The proposal (available at fasb.org) would require entities to measure and classify share-based payments to a customer by applying the guidance in FASB ASC Topic 718, Compensation — Stock Compensation.

Under the proposal, share-based payments to a customer would be measured on the basis of the grant-date fair value of the share-based payment, in accordance with Topic 718. The grant date is the date when a supplier and a customer reach a mutual understanding of the key terms and conditions of a share-based payment award.

The classification and subsequent measurement of the award would be subject to Topic 718 unless the share-based payment award is modified later and the grantee is no longer considered a customer.

If approved, the new proposal would clarify that the Topic 718 guidance should be applied in these circumstances. Comments were due April 18.

• FASB proposes transition relief for credit losses standard: A FASB proposal (available at fasb.org) is designed to ease the transition to its new credit losses standard by providing an option to measure certain types of assets at fair value. Under the proposal, preparers would be permitted to irrevocably elect the fair value option, on an instrument-by-instrument basis, for eligible financial assets measured at amortized cost basis upon adoption of the credit losses standard.