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FASB clarifies stock compensation, service agreement accounting

Tammy Whitehouse | May 16, 2017

In a pair of updates to accounting standards, the Financial Accounting Standards Board is looking to shore up differences in how companies account for stock compensation and service concession arrangements.

Accounting Standards Update No. 2017-07 is meant both to clarify and to reduce the cost and complexity in the accounting for changes in terms and conditions in share-based payment awards under Topic 718 in the Accounting Standards Codification. Companies might make changes to the terms and conditions for any number of reasons, and the changes can have varying effects on the awards. FASB learned companies are taking different approaches to determining when to apply modification accounting to such changes.

FASB’s update says companies should account for the effects of a modification to a share-based payment award unless three specific...

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