June 2, 2023

Newburg | CPA News Brief

On Thursday, May 11th, the Financial Accounting Standards Board (FASB) issued a proposed Accounting Standards Update (ASU) that aims to improve generally accepted accounting principles (GAAP) with illustrative guidance to assist entities in determining “whether profits interest and similar awards should be accounted for as a share-based payment arrangement within the scope of FASB Accounting Standards Codification Topic 718, Compensation—Stock Compensation,” according to a press release.

These types of awards are generally given by private companies to employees and service providers as part of their compensation package and provide holders with the opportunity to participate in any future profits or equity appreciation. The Private Company Council (PCC), an advisory body to the FASB, recommended the creation of this guidance for reporting entities after noticing inconsistencies in existing accounting practices for these types of awards.

Comments on the proposed ASU will be accepted until July 10, 2023. Stakeholders are encouraged to review the full proposal and submit responses via the electronic feedback form.


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