Annual Accounting and Auditing Workshop. Kurt Oestriecher

reduce revenue, the standard did not address how to measure the share-based payment. Because some entities may choose to apply the non-cash guidance under ASC 606 and others may use the guidance in ASC 718 (measurement at grant date), the FASB issued this standard so that such diversity in practice would not exist.

      Who is affected by this ASU?

      Any entity that issues share-based payments to customers.

      What are the main provisions of this ASU?

      Entities that issue share-based payments to customers shall use the guidance in Topic 718 to measure and classify the award. Topic 718 requires the payment to be measured on the basis of the grant-date fair value. The grant date is the date at which a grantor and grantee reach a mutual understanding of the key terms and conditions of a share-based payment award. The amount recorded will reduce the transaction price (revenue).

      When will this ASU be effective?

      For entities that have not yet adopted the amendments in Update 2018-07, the amendments are effective for

       Public companies — Fiscal years beginning after December 15, 2019, and interim periods within those years

       All other entities — Fiscal years beginning after December 15, 2019, and interim periods beginning after December 15, 2020

For entities that have adopted the amendments in Update 2018-07, the amendments are effective in fiscal years beginning after December 15, 2019, and interim period within those fiscal years.

      Early adoption is permitted, but not before an entity adopts ASU 2018-07

      Summary

      It is important to keep abreast of the narrow scope standards as they could affect the entity for whom you are responsible for issuing, auditing, review, compiling, or preparing financial statements. The implementation dates for many of these standards are often much sooner than broad standards, and many times early implementation is permitted.