Stock Compensation: Scope, Classification, and Measurement

Share-based payment awards can be issued by an entity to a variety of individuals for a variety of reasons. These awards can be issued to employees, members of the board of directors, even vendors. But when are they considered to be issued to employees? And when are they compensatory? And what is the difference in accounting? 

This 2-part course will explore just that! 

In part 1 (this course), we’ll explore the scope of ASC 718, determine how to classify awards within the scope as either equity-classified or liability-classified, and take a look at basic measurement techniques and key inputs when determining the fair value of those awards. 

In part 2 (the Stock Compensation: Attribution and Modifications course), we’ll look at what happens after the award’s initial recognition at the grant date, including attribution of the award to compensation expense, how modifications are accounted for, and disclosures associated with share-based payments.

 By the end of this course, you should be able to: 

• Recall the various types of share-based payment awards issued by entities 
• Distinguish between awards granted to an employee or a nonemployee
• Recognize the criteria necessary for the share-based payment award to employees to be considered non-compensatory 
• Distinguish share-based payment awards as either equity-classified or liability-classified 
• Identify the six inputs necessary when determining the fair value of awards using various pricing models