FASB issues update on modification accounting for share-based payment awards

By Anslee Wolfe

In a new accounting standard issued Wednesday, FASB hopes to provide clarity by offering guidance on the scope of modification accounting for share-based payment awards.

Accounting Standards Update No. 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting, gives direction on which changes to the terms or conditions of these awards require an entity to apply modification accounting in ASC Topic 718, according to a news release.

The confusion has stemmed from the word "modification," according to the standard. It's defined by FASB as "a change in any of the terms or conditions of a share-based payment award," a definition some stakeholders found too broad, leading to diversity in practice. The new standard provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting.

In addition to reducing diversity in practice, the standard is designed to lower costs and complexity for entities when they apply the guidance in Topic 718.

The standard is effective for all entities for annual periods beginning after Dec. 15, 2017—and interim periods within those annual periods. Early adoption is allowed.

Anslee Wolfe is a freelance writer in Colorado Springs, Colo. To comment on this article or to suggest an idea for another article, contact Ken Tysiac, editorial director, at Kenneth.Tysiac@aicpa-cima.com or 919-402-2112.

SPONSORED REPORT

Scorecard preparation templates and tips

With Workiva, we've created a PowerPoint deck that helps you create your own scorecards -- quick reference reports used across organizations to update stakeholders on the performance of defined deliverables.

100th ANNIVERSARY

Black CPA Centennial, 1921–2021

With 2021 marking the 100th anniversary of the first Black licensed CPA in the United States, a yearlong campaign kicked off to recognize the nation’s Black CPAs and encourage greater progress in diversity, inclusion, and equity in the CPA profession.