FASB improves guidance on share-based consideration payable to a customer

FASB has published an Accounting Standards Update (ASU) to provide accounting guidance for share-based consideration payable to a customer in conjunction with selling goods or services. 

The changes improve financial reporting results by addressing the intersection of the requirements of FASB Accounting Standards Codification® Topic 606, Revenue from Contracts with Customers, and Topic 718, Compensation—Stock Compensation. 

The amendments affect the timing of revenue recognition for entities that offer to pay share-based consideration (for example, equity instruments) to a customer (or to other parties that purchase the entity’s goods or services from the customer) to incentivize the customer (or its customers) to purchase its goods and services. Specifically, the amendments clarify the requirements for share-based consideration payable to a customer that vests upon the customer purchasing a specified volume or monetary amount of goods and services from the entity.