The Financial Accounting Standards Board (FASB) has issued a proposal that would add examples of profits interest awards to the Accounting Standards Codification.
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- On May 11, 2023, the FASB issued a proposal on the scope application of profits interest and similar awards.
- The proposal would amend Topic 718, “Compensation – Stock Compensation,” by adding illustrative examples to clarify how the existing scoping guidance within Topic 718 applies to facts and circumstances associated with common types of profits interest awards.
- The proposal aims to reduce complexity and diversity in practice in determining whether a profits interest award is accounted for as a share-based payment under Topic 718.
- Comments on the proposal are due by July 10, 2023.