SFAS No. 123R, Revised in December 2004
“Share-Based Payment”
“Share-Based Payment”
Recognition Principle
Recognize when goods and services are received.
Classification
(a) Awards classified as equity
(b) Awards classified as liabilities
(b) Awards classified as liabilities
Awards classified as equity
Measurement date: Grant date
Measurement principle
(a) Employees –> Measured at Fair Value (FV) of Equity Instruments issued
(b) Nonemployees
–> FV of Equity Instruments issued
or
–> FV of goods and services if more reliably measured
(a) Employees –> Measured at Fair Value (FV) of Equity Instruments issued
(b) Nonemployees
–> FV of Equity Instruments issued
or
–> FV of goods and services if more reliably measured
Compensation costs are recognized over the requisite service period.
Awards classified as liabilities
Measurement date: Settlement date
Measurement principle
–> Measured at FV of liabilities
–> Remeasured at each reporting date
–> Until settlement date
–> Measured at FV of liabilities
–> Remeasured at each reporting date
–> Until settlement date
Changes in FV of liabilities are recognized as compensation costs
Nonpublic entities have a choice of (a) or (b)
(a) FV of liabilities: preferable
(b) Intrinsic value
(b) Intrinsic value
If requisite service is rendered, but options are not exercised
–> previously recognized compensation costs are not reversed
If performance conditions are satisfied, but market conditions are not satisfied
–> previously recognized compensation costs are not reversed
–> market conditions are not considered as vesting conditions
–> market conditions are not considered as vesting conditions
Reload options are not considered in determining the FV at grant date
–> subsequent grant is treated as a separate award