The Financial Accounting Standards Board has proposed a new accounting standards update for simplifying the financial reporting for nonemployee share-based payments.

The proposed update would expand the scope of the current standard on stock compensation, which now covers only payments to employees, so it also includes payments for goods and services to nonemployees. That way, the accounting for share-based payments to both nonemployees and employees alike would resemble each other more closely. The proposed update would supersede Subtopic 505-50, Equity—Equity Based Payments to Non-Employees.

FASB said it received recommendations for the changes from several sources, including the Private Company Council, a post-implementation review of its existing standard on share-based payments, and its own simplification initiative. FASB is asking for comments on the proposal by June 5, 2017. It plans to decide on an effective date for the standard after it considers the feedback it receives during the comment period.

FASB, GASB and FAF logos on the wall at headquarters in Norwalk, Connecticut
Courtesy of GASB

More information about the proposal—including a FASB In Focus summary—can be found at www.fasb.org.

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