Alert: FASB Accounting Standards Update No. 2016-09 - Compensation: Stock Compensation

Category: US GAAP

Alert: FASB Accounting Standards Update No. 2016-09 - Compensation: Stock Compensation

On March 30, 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-09 Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-based Payment Accounting. The ASU seeks to reduce the cost and complexity of Topic 718 related to the accounting for employee share-based payments, including:

  • The income tax consequences
  • Classification of awards as equity vs. liabilities
  • Statement of cash flows presentation
  • For private entities:
    • The determination of the expected term of a share-based award
    • The measurement method applied for measuring liability-classified awards (i.e., move from fair value to intrinsic value method)

The amendments are effective for fiscal years beginning after December 15, 2016, including interim periods therein, for public business entities. All other entities are required to apply the amendments for fiscal years beginning after December 15, 2017 and interim periods within fiscal years beginning after December 15, 2018. Early application is permitted for all entities. The transitional provisions specify to which amendments an entity should apply the modified retrospective method, retrospective method or prospective method.

To access the full script of ASU No. 2016-09, click here.

This communication contains a general overview of the topic and is current as of March 30, 2016. The application of the principles addressed will depend upon the particular facts and circumstances of each individual case. Accordingly, this publication is not a substitute for professional advice and we recommend that any decisions you take about the application or not of any of the information presented be made in consultation with a qualified professional, who can address any variance that may be required to reflect your circumstances. Please contact your local MNP representative for customized assistance with the application of this material. MNP LLP accepts no responsibility or liability for any loss related to any person's use of or reliance upon this material. © MNP LLP 2016. All rights reserved.

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Michelle Balmer

Michelle Balmer CPA, CA

Vice President, Assurance

Michelle Balmer, CPA, CA, is a Senior Assurance Services Partner with MNP. With 14 years of experience in public practice, Michelle helps a broad range of public and privately held companies in a variety of industries. She also works on special projects, including costing studies, benchmarking and best-practice studies, operational analyses, litigation support and due diligence.

As a key member of MNP's Assurance team, Michelle has played an instrumental role in assurance policy development, implementing accounting and assurance standards firm-wide and educating assurance practitioners regarding methodologies and new pronouncements. She also provides technical advice and consultation on accounting and assurance issues, as well as on rules of professional conduct issues, to all MNP practitioners.

Michelle was certified a Chartered Accountant (CA) after obtaining a Bachelor of Commerce degree from the University of Alberta. She has been actively involved with the Institute of Chartered Accountants of Alberta, including the Chartered Accountants School of Business, in an instructional and marketing capacity. An avid volunteer, she has assisted numerous groups such as the Easter Seals of Alberta, Paralympic Sports Association and Junior Achievement of Northern Alberta.