FASB Issues New Guidance on Share-Based Consideration to Customers
| 16 May 2025
The Financial Accounting Standards Board (FASB) has released a new Accounting Standards Update (ASU) that provides much-needed clarity on how to account for share-based consideration—such as equity instruments—granted to customers in exchange for purchasing goods or services. Why this matters: The update addresses a key gap at the intersection of: Entities often use share-based incentives to drive sales, offering equity instruments to customers (or even to downstream buyers) as part of commercial agreements. These incentives may vest based on the volume or value of goods or services purchased. Until now, guidance on how to account for such arrangements was limited. What’s new: This update improves financial reporting by aligning compensation accounting with revenue recognition, ensuring consistency, comparability, and transparency in financial statements. At Ez-XBRL, we help companies stay compliant with evolving accounting standards through intelligent tagging, accurate reporting, and full alignment with authoritative guidance like this. For technical filers and accounting teams, understanding the implications of this ASU is essential for future filings and disclosures involving share-based incentives. To find out more details please visit : fasb.org.com |