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FASB Finalizes New Rule on Stock Compensation

Tammy Whitehouse | July 1, 2014

The Financial Accounting Standards Board has finalized new accounting requirements around stock compensation intended to resolve differences in how companies treat awards that have specific performance targets attached.

FASB's Emerging Issues Task Force studied the issue and determined companies have followed different approaches for how to account for share-based payment awards when companies might attach performance targets like hitting a certain profitability target or selling share in an initial public offering. Not all companies require the employee to still be working for the company when the performance target is achieved, FASB says, leading to difference in interpretation for how to treat vesting.

The new guidance will apply to any company that grants share-based payments where the terms of the award include...

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