The FASB issued ASU 2019-08, Compensation—Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606): Codification Improvements—Share-Based Consideration Payable to a Customer. The ASU clarifies the interaction of Topic 718 and Topic 606 as it relates to share-based payments made to customers with the ultimate goal of reducing diversity in practice. Additionally, it clarifies that an entity should measure and classify share-based payment awards granted to customers at grant date fair value according to the guidance in Topic 718.
This ASU is effective in fiscal years beginning after December 15, 2019. Early adoption is permitted, but it may not be earlier than the adoption of ASU 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. If both amendments are adopted in the same period, the entity should apply the ASU through a cumulative-effect adjustment to the opening balance of retained earnings at the beginning of the period of adoption. If this amendment is adopted in a fiscal year after the adoption of ASU 2018-07, the adoption should be retrospective to the opening balance sheet through a cumulative adjustment through retained earnings of either the year in which ASU 2018-07 was adopted or the year in which this ASU is adopted.
The full text of the ASU is available here.
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