{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/718/20/#35-subsequent-measurement","source":"FASB Accounting Standards Codification, Basic View","usage":"Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective.","topic":"718","topic_title":"Compensation—Stock Compensation","subtopic":"718-20","subtopic_title":"Awards Classified as Equity","section":{"number":"35","label":"35 Subsequent Measurement","anchor":"35-subsequent-measurement","is_sec":false,"groups":[{"block":null,"heading":"Fair Value Not Reasonably Estimable","paragraphs":[{"citation":"718-20-35-1","para":"35-1","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_CA3EBD65-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">An equity instrument for which it is not possible to reasonably estimate <a href=\"/glossary/f/#fair-value\" class=\"term\" title=\"The amount at which an asset (or liability) could be bought (or incurred) or sold (or settled) in a current transaction between willing parties, that is, other than in a forced or liquidation sale.\"><span>fair value</span></a> at the <a href=\"/glossary/g/#grant-date\" class=\"term\" title=\"The date at which a grantor and a grantee reach a mutual understanding of the key terms and conditions of a share-based payment award. The grantor becomes contingently obligated on the grant date to issue equity instruments or transfer assets to a grantee who delivers goods or renders services or purchases goods or services as a customer. Awards made under an arrangement that is subject to shareholder approval are not deemed to be granted until that approval is obtained unless approval is essentially a formality (or perfunctory), for example, if management and the members of the board of directors control enough votes to approve the arrangement. Similarly, individual awards that are subject to approval by the board of directors, management, or both are not deemed to be granted until all such approvals are obtained. The grant date for an award of equity instruments is the date that a grantee begins to benefit from, or be adversely affected by, subsequent changes in the price of the grantor's equity shares. Paragraph 718-10-25-5 provides guidance on determining the grant date. See Service Inception Date.\"><span>grant date</span></a> shall be remeasured at each reporting date through the date of exercise or other <a href=\"/glossary/s/#settlement-of-an-award\" class=\"term\" title=\"An action or event that irrevocably extinguishes the issuing entity's obligation under a share-based payment award. Transactions and events that constitute settlements include the following: Exercise of a share option or lapse of an option at the end of its contractual term Vesting of shares Forfeiture of shares or share options due to failure to satisfy a vesting condition An entity's repurchase of instruments in exchange for assets or for fully vested and transferable equity instruments. The vesting of a share option is not a settlement because the entity remains obligated to issue shares upon exercise of the option.\"><span>settlement</span></a>. </span></span> <span class=\"sfragment\" id=\"sfr_CA3EBF52-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The final measure of compensation cost shall be the <a href=\"/glossary/i/#intrinsic-value\" class=\"term\" title=\"The amount by which the fair value of the underlying stock exceeds the exercise price of an option. For example, an option with an exercise price of $20 on a stock whose current market price is $25 has an intrinsic value of $5. (A nonvested share may be described as an option on that share with an exercise price of zero. Thus, the fair value of a share is the same as the intrinsic value of such an option on that share.)\"><span>intrinsic value</span></a> of the instrument at the date it is settled. Compensation cost for each period until settlement shall be based on the change (or a portion of the change, depending on the percentage of the requisite service that has been rendered </span></span> <span class=\"sfragment\" id=\"sfr_CA3EC09C-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">for an employee award or the percentage that would have been recognized had the grantor paid cash for the goods or services instead of paying with a nonemployee award </span></span> <span class=\"sfragment\" id=\"sfr_CA3EC1E0-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">at the reporting date) in the intrinsic value of the instrument in each reporting period. The entity shall continue to use the intrinsic value method for those instruments even if it subsequently concludes that it is possible to reasonably estimate their fair value. </span></span> </div> </div>","snippet":"An equity instrument for which it is not possible to reasonably estimate fair value at the grant date shall be remeasured at each reporting date through the date of exercise or other settlement. The final measure of comp…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1baa98586b3ba47a6065f95ca353a2a5efc66b73f2b1ba9712b029962fa96027","downloaded_from":"2026-09-10T01:04:41.973Z","last_downloaded_at":"2026-09-10T01:04:41.973Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481119","source_sha256":"8176ff99adcdf90119f89bfa0d16ad231fd34f01dcb79b0fcfc3afdad37f4742"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d5e3cd01887ba72c305168c5ddddab7305a9530c6160dfde914947cd03b94616","downloaded_from":"2026-09-10T01:04:41.973Z","last_downloaded_at":"2026-09-10T01:04:41.973Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481119","source_sha256":"8176ff99adcdf90119f89bfa0d16ad231fd34f01dcb79b0fcfc3afdad37f4742"}},{"block":null,"heading":"Contingent Features","paragraphs":[{"citation":"718-20-35-2","para":"35-2","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_CA3EC321-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">A contingent feature of an <a href=\"/glossary/a/#award\" class=\"term\" title=\"The collective noun for multiple instruments with the same terms and conditions granted at the same time either to a single grantee or to a group of grantees. An award may specify multiple vesting dates, referred to as graded vesting, and different parts of an award may have different expected terms. References to an award also apply to a portion of an award.\"><span>award</span></a> that might cause a grantee to return to the entity either equity instruments earned or realized gains from the sale of equity instruments earned for consideration that is less than fair value on the date of transfer (including no consideration), such as a clawback feature (see paragraph <a href=\"/asc/718/10/#718-10-55-8\" class=\"xref\">718-10-55-8</a>), shall </span></span> <span class=\"sfragment\" id=\"sfr_CA3EC42F-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\"> be accounted for if and when the contingent event occurs. Example 10 (see paragraph <a href=\"/asc/718/20/#718-20-55-84\" class=\"xref\">718-20-55-84</a>) provides an illustration of an <a href=\"/glossary/e/#employee\" class=\"term\" title=\"An individual over whom the grantor of a share-based compensation award exercises or has the right to exercise sufficient control to establish an employer-employee relationship based on common law as illustrated in case law and currently under U.S. Internal Revenue Service (IRS) Revenue Ruling 87-41. A reporting entity based in a foreign jurisdiction would determine whether an employee-employer relationship exists based on the pertinent laws of that jurisdiction. Accordingly, a grantee meets the definition of an employee if the grantor consistently represents that individual to be an employee under common law. The definition of an employee for payroll tax purposes under the U.S. Internal Revenue Code includes common law employees. Accordingly, a grantor that classifies a grantee potentially subject to U.S. payroll taxes as an employee also must represent that individual as an employee for payroll tax purposes (unless the grantee is a leased employee as described below). A grantee does not meet the definition of an employee solely because the grantor represents that individual as an employee for some, but not all, purposes. For example, a requirement or decision to classify a grantee as an employee for U.S. payroll tax purposes does not, by itself, indicate that the grantee is an employee because the grantee also must be an employee of the grantor under common law. A leased individual is deemed to be an employee of the lessee if all of the following requirements are met: The leased individual qualifies as a common law employee of the lessee, and the lessor is contractually required to remit payroll taxes on the compensation paid to the leased individual for the services provided to the lessee. The lessor and lessee agree in writing to all of the following conditions related to the leased individual: The lessee has the exclusive right to grant stock compensation to the individual for the employee service to the lessee. The lessee has a right to hire, fire, and control the activities of the individual. (The lessor also may have that right.) The lessee has the exclusive right to determine the economic value of the services performed by the individual (including wages and the number of units and value of stock compensation granted). The individual has the ability to participate in the lessee's employee benefit plans, if any, on the same basis as other comparable employees of the lessee. The lessee agrees to and remits to the lessor funds sufficient to cover the complete compensation, including all payroll taxes, of the individual on or before a contractually agreed upon date or dates. A nonemployee director does not satisfy this definition of employee. Nevertheless, nonemployee directors acting in their role as members of a board of directors are treated as employees if those directors were elected by the employer's shareholders or appointed to a board position that will be filled by shareholder election when the existing term expires. However, that requirement applies only to awards granted to nonemployee directors for their services as directors. Awards granted to those individuals for other services shall be accounted for as awards to nonemployees. (P) December 16, 2026; (N) December 16, 2026220-40-65-1An individual over whom a reporting entity exercises or has the right to exercise sufficient control to establish an employer-employee relationship based on common law as illustrated in case law and currently under U.S. Internal Revenue Service (IRS) Revenue Ruling 87-41. A reporting entity based in a foreign jurisdiction would determine whether an employee-employer relationship exists based on the pertinent laws of that jurisdiction. Accordingly, an individual meets the definition of an employee if the reporting entity consistently represents that individual to be an employee under common law. The definition of an employee for payroll tax purposes under the U.S. Internal Revenue Code includes common law employees. Accordingly, a reporting entity that classifies an individual potentially subject to U.S. payroll taxes as an employee also must represent that individual as an employee for payroll tax purposes (unless the individual is a leased employee as described below). An individual that meets the definition of an employee includes, but is not limited to, a full-time, part-time, temporary, or seasonal employee. An individual does not meet the definition of an employee solely because the reporting entity represents that individual as an employee for some, but not all, purposes. For example, a requirement or decision to classify an individual as an employee for U.S. payroll tax purposes does not, by itself, indicate that the individual is an employee because the individual also must be an employee of the reporting entity under common law. A leased individual is deemed to be an employee of the lessee if all of the following requirements are met: The leased individual qualifies as a common law employee of the lessee, and the lessor is contractually required to remit payroll taxes on the compensation paid to the leased individual for the services provided to the lessee. The lessor and lessee agree in writing to all of the following conditions related to the leased individual: The lessee has the exclusive right to grant compensation to the individual for the employee service to the lessee. The lessee has a right to hire, fire, and control the activities of the individual. (The lessor also may have that right.) The lessee has the exclusive right to determine the economic value of the services performed by the individual (including wages and the number of units and value of stock compensation granted). The individual has the ability to participate in the lessee's employee benefit plans, if any, on the same basis as other comparable employees of the lessee. The lessee agrees to and remits to the lessor funds sufficient to cover the complete compensation, including all payroll taxes, of the individual on or before a contractually agreed upon date or dates. A nonemployee director does not satisfy this definition of employee. Nevertheless, nonemployee directors acting in their role as members of a board of directors are treated as employees if those directors were elected by the employer's shareholders or appointed to a board position that will be filled by shareholder election when the existing term expires. However, that requirement applies only to awards and other compensation granted to nonemployee directors for their services as directors. Awards granted and compensation paid to those individuals for other services shall be accounted for as awards and compensation to nonemployees.\"><span>employee</span></a> award with a clawback feature.</span></span> </div> </div>","snippet":"A contingent feature of an award that might cause a grantee to return to the entity either equity instruments earned or realized gains from the sale of equity instruments earned for consideration that is less than fair v…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5ea29f8d593b2bd60f5bba70dca3b938f6acf9cc69898ea094b6950addfb7569","downloaded_from":"2026-09-10T01:04:41.973Z","last_downloaded_at":"2026-09-10T01:04:41.973Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481119","source_sha256":"8176ff99adcdf90119f89bfa0d16ad231fd34f01dcb79b0fcfc3afdad37f4742"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4a812be7117e1824e23940311958854e7b4b241e6bf57d88789204499b917f47","downloaded_from":"2026-09-10T01:04:41.973Z","last_downloaded_at":"2026-09-10T01:04:41.973Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481119","source_sha256":"8176ff99adcdf90119f89bfa0d16ad231fd34f01dcb79b0fcfc3afdad37f4742"}},{"block":null,"heading":"Modification of an Award","paragraphs":[{"citation":"718-20-35-2A","para":"35-2A","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_CA3EC514-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">An entity shall account for the effects of a <a href=\"/glossary/m/#modification\" class=\"term\" title=\"A change in the terms or conditions of a share-based payment award.\"><span>modification</span></a> as described in paragraphs <div class=\"xref-range displayInline\"><a href=\"/asc/718/20/#718-20-35-3\" class=\"xref\">718-20-35-3 through 35-9</a></div>, unless all the following are met: </span></span> <ol class=\"ol-norm\"> <li class=\"li-norm\"><span class=\"linum\">a</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_CA3EC5E6-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The fair value (or <a href=\"/glossary/c/#calculated-value\" class=\"term\" title=\"A measure of the value of a share option or similar instrument determined by substituting the historical volatility of an appropriate industry sector index for the expected volatility of a nonpublic entity's share price in an option-pricing model.\"><span>calculated value</span></a> or <a href=\"/glossary/i/#intrinsic-value\" class=\"term\" title=\"The amount by which the fair value of the underlying stock exceeds the exercise price of an option. For example, an option with an exercise price of $20 on a stock whose current market price is $25 has an intrinsic value of $5. (A nonvested share may be described as an option on that share with an exercise price of zero. Thus, the fair value of a share is the same as the intrinsic value of such an option on that share.)\"><span>intrinsic value</span></a>, if such an alternative measurement method is used) of the modified <a href=\"/glossary/a/#award\" class=\"term\" title=\"The collective noun for multiple instruments with the same terms and conditions granted at the same time either to a single grantee or to a group of grantees. An award may specify multiple vesting dates, referred to as graded vesting, and different parts of an award may have different expected terms. References to an award also apply to a portion of an award.\"><span>award</span></a> is the same as the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the original award immediately before the original award is modified. If the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification.</span></span> </div> </li> <li class=\"li-norm\"><span class=\"linum\">b</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_CA3EC6B9-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified. </span></span> </div> </li> <li class=\"li-norm\"><span class=\"linum\">c</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_CA3EC77D-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. </span></span> </div> </li> </ol> <span class=\"sfragment\" id=\"sfr_CA3EC842-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The disclosure requirements in paragraphs <a href=\"/asc/718/10/#718-10-50-1\" class=\"xref\">718-10-50-1 through 50-2A</a> and <a href=\"/asc/718/10/#718-10-50-4\" class=\"xref\">718-10-50-4</a> apply regardless of whether an entity is required to apply modification accounting. </span></span> </div> </div>","snippet":"An entity shall account for the effects of a modification as described in paragraphs 718-20-35-3 through 35-9, unless all the following are met:\n(a) The fair value (or calculated value or intrinsic value, if such an alte…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:30c7d24243913f18c20d589181b3898987f4475727c7953f271ea89aa7b5d802","downloaded_from":"2026-09-10T01:04:41.973Z","last_downloaded_at":"2026-09-10T01:04:41.973Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481119","source_sha256":"8176ff99adcdf90119f89bfa0d16ad231fd34f01dcb79b0fcfc3afdad37f4742"}},{"citation":"718-20-35-3","para":"35-3","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_CA3EC962-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Except as described in paragraph <a href=\"/asc/718/20/#718-20-35-2A\" class=\"xref\">718-20-35-2A</a>, a modification of the terms or conditions of an equity award shall be treated as an exchange of the original award for a new award. </span></span> <span class=\"sfragment\" id=\"sfr_CA3ECA90-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">In substance, the entity repurchases the original instrument by issuing a new instrument of equal or greater value, incurring additional compensation cost for any incremental value. The effects of a modification shall be measured as follows: </span></span> <ol class=\"ol-norm\"> <li class=\"li-norm\"><span class=\"linum\">a</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_CA3ECBAE-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Incremental compensation cost shall be measured as the excess, if any, of the fair value of the modified award determined in accordance with the provisions of this Topic over the fair value of the original award immediately before its terms are modified, measured based on the share price and other pertinent factors at that date. </span></span> <span class=\"sfragment\" id=\"sfr_CA3ECD38-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">As indicated in paragraph <a href=\"/asc/718/10/#718-10-30-20\" class=\"xref\">718-10-30-20</a>, references to fair value throughout this Topic shall be read also to encompass calculated value. </span></span> <span class=\"sfragment\" id=\"sfr_CA3ECED7-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The effect of the modification on the number of instruments expected to <a href=\"/glossary/v/#vest\" class=\"term\" title=\"To earn the rights to. A share-based payment award becomes vested at the date that the grantee's right to receive or retain shares, other instruments, or cash under the award is no longer contingent on satisfaction of either a service condition or a performance condition. Market conditions are not vesting conditions. The stated vesting provisions of an award often establish the employee's requisite service period or the nonemployee's vesting period, and an award that has reached the end of the applicable period is vested. However, as indicated in the definition of requisite service period and equally applicable to a nonemployee's vesting period, the stated vesting period may differ from those periods in certain circumstances. Thus, the more precise terms would be options, shares, or awards for which the requisite good has been delivered or service has been rendered and the end of the employee's requisite service period or the nonemployee's vesting period.\"><span>vest</span></a> also shall be reflected in determining incremental compensation cost. The estimate at the modification date of the portion of the award expected to vest shall be subsequently adjusted, if necessary, in accordance with paragraph <a href=\"/asc/718/10/#718-10-35-1D\" class=\"xref\">718-10-35-1D</a> or <a href=\"/asc/718/10/#718-10-35-3\" class=\"xref\">718-10-35-3</a> and other guidance in Examples 14 through 15 (see paragraphs <div class=\"xref-range displayInline\"><a href=\"/asc/718/20/#718-20-55-107\" class=\"xref\">718-20-55-107 through 55-121</a></div>). </span></span> </div> </li> <li class=\"li-norm\"><span class=\"linum\">b</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_CA3ED04D-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Total recognized compensation cost for an equity award shall at least equal the fair value of the award at the grant date unless at the date of the modification the performance or service conditions of the original award are not expected to be satisfied. Thus, the total compensation cost measured at the date of a modification shall be the sum of the following: </span></span> </div> <ol class=\"ol-norm\"> <li class=\"li-norm\"><span class=\"linum\">1</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_CA3ED1ED-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The portion of the grant-date fair value of the original award for which the promised good is expected to be delivered (or has already been delivered) or the service is expected to be rendered (or has already been rendered) at that date </span></span> </div> </li> <li class=\"li-norm\"><span class=\"linum\">2</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_CA3ED389-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The incremental cost resulting from the modification. </span></span> </div> </li> </ol> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_CA3ED51D-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Compensation cost shall be subsequently adjusted, if necessary, in accordance with paragraph <a href=\"/asc/718/10/#718-10-35-1D\" class=\"xref\">718-10-35-1D</a> or <a href=\"/asc/718/10/#718-10-35-3\" class=\"xref\">718-10-35-3</a> and other guidance in Examples 14 through 15 (see paragraphs <div class=\"xref-range displayInline\"><a href=\"/asc/718/20/#718-20-55-107\" class=\"xref\">718-20-55-107 through 55-121</a></div>). </span></span> </div> </li> <li class=\"li-norm\"><span class=\"linum\">c</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_CA3ED6DC-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">A change in compensation cost for an equity award measured at intrinsic value in accordance with paragraph <a href=\"/asc/718/20/#718-20-35-1\" class=\"xref\">718-20-35-1</a> shall be measured by comparing the intrinsic value of the modified award, if any, with the intrinsic value of the original award, if any, immediately before the modification. </span></span> </div> </li> </ol> </div> </div>","snippet":"Except as described in paragraph 718-20-35-2A, a modification of the terms or conditions of an equity award shall be treated as an exchange of the original award for a new award. In substance, the entity repurchases the …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3f76459364b0d27f6e5d4a043a8c05a1b1ce6c7a47eb3d5df10be802934e6c08","downloaded_from":"2026-09-10T01:04:41.973Z","last_downloaded_at":"2026-09-10T01:04:41.973Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481119","source_sha256":"8176ff99adcdf90119f89bfa0d16ad231fd34f01dcb79b0fcfc3afdad37f4742"}},{"citation":"718-20-35-3A","para":"35-3A","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_CA3ED85E-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">An entity that has an accounting policy to account for forfeitures when they occur in accordance with paragraph <a href=\"/asc/718/10/#718-10-35-1D\" class=\"xref\">718-10-35-1D</a> or <a href=\"/asc/718/10/#718-10-35-3\" class=\"xref\">718-10-35-3</a> shall assess at the date of the modification whether the performance or service conditions of the original award are expected to be satisfied when measuring the effects of the modification in accordance with paragraph <a href=\"/asc/718/20/#718-20-35-3\" class=\"xref\">718-20-35-3</a>. However, the entity shall apply its accounting policy to account for forfeitures when they occur when subsequently accounting for the modified award.</span></span> </div> </div>","snippet":"An entity that has an accounting policy to account for forfeitures when they occur in accordance with paragraph 718-10-35-1D or 718-10-35-3 shall assess at the date of the modification whether the performance or service …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2517a2dd77c2830c56baf650064a40164db0b08a018e040e015fcc72928d61e6","downloaded_from":"2026-09-10T01:04:41.973Z","last_downloaded_at":"2026-09-10T01:04:41.973Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481119","source_sha256":"8176ff99adcdf90119f89bfa0d16ad231fd34f01dcb79b0fcfc3afdad37f4742"}},{"citation":"718-20-35-4","para":"35-4","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_CA3EDA35-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Examples 12 through 16 (see paragraphs <div class=\"xref-range displayInline\"><a href=\"/asc/718/20/#718-20-55-93\" class=\"xref\">718-20-55-93 through 55-144</a></div>) provide additional guidance on, and illustrate the accounting for, modifications of both vested and nonvested awards, including a modification that changes the classification of the related financial instruments from equity to liability or vice versa, and modifications of vesting conditions. Paragraphs <div class=\"xref-range displayInline\"><a href=\"/asc/718/10/#718-10-35-9\" class=\"xref\">718-10-35-9 through 35-14</a></div> provide additional guidance on accounting for modifications of certain freestanding financial instruments that initially were subject to this Topic but subsequently became subject to other applicable generally accepted accounting principles (GAAP). </span></span> </div> </div>","snippet":"Examples 12 through 16 (see paragraphs 718-20-55-93 through 55-144) provide additional guidance on, and illustrate the accounting for, modifications of both vested and nonvested awards, including a modification that chan…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0accdf9ea695fbc4f9cd9e9bb668161c508134ebb01bef943e267f0332f25162","downloaded_from":"2026-09-10T01:04:41.973Z","last_downloaded_at":"2026-09-10T01:04:41.973Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481119","source_sha256":"8176ff99adcdf90119f89bfa0d16ad231fd34f01dcb79b0fcfc3afdad37f4742"}},{"citation":"718-20-35-5","para":"35-5","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_CA3EDC1B-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Except as described in paragraph <a href=\"/asc/718/20/#718-20-35-2A\" class=\"xref\">718-20-35-2A</a>, a <a href=\"/glossary/s/#short-term-inducement\" class=\"term\" title=\"An offer by the entity that would result in modification of an award to which an award holder may subscribe for a limited period of time.\"><span>short-term inducement</span></a> shall be accounted for as a modification of the terms of only the awards of grantees who accept the inducement, and other inducements shall be accounted for as modifications of the terms of all awards subject to them. </span></span> </div> </div>","snippet":"Except as described in paragraph 718-20-35-2A, a short-term inducement shall be accounted for as a modification of the terms of only the awards of grantees who accept the inducement, and other inducements shall be accoun…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6350c090b3cc88e2b0529b2154b417c8c4d0f348af8f72e12116c84af2f113e2","downloaded_from":"2026-09-10T01:04:41.973Z","last_downloaded_at":"2026-09-10T01:04:41.973Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481119","source_sha256":"8176ff99adcdf90119f89bfa0d16ad231fd34f01dcb79b0fcfc3afdad37f4742"}},{"citation":"718-20-35-6","para":"35-6","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_CA3EDDA1-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Exchanges of share options or other equity instruments or changes to their terms in conjunction with an <a href=\"/glossary/e/#equity-restructuring\" class=\"term\" title=\"A nonreciprocal transaction between an entity and its shareholders that causes the per-share fair value of the shares underlying an option or similar award to change, such as a stock dividend, stock split, spinoff, rights offering, or recapitalization through a large, nonrecurring cash dividend.\"><span>equity restructuring</span></a> or a business combination are modifications for purposes of this Subtopic. </span></span> <span class=\"sfragment\" id=\"sfr_CA3EDEF6-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">An entity shall apply the guidance in paragraph <a href=\"/asc/718/20/#718-20-35-2A\" class=\"xref\">718-20-35-2A</a> to those exchanges or changes to determine whether it shall account for the effects of those modifications. </span></span> <span class=\"sfragment\" id=\"sfr_CA3EE021-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Example 13 (see paragraph <a href=\"/asc/718/20/#718-20-55-103\" class=\"xref\">718-20-55-103</a>) provides further guidance on applying the provisions of this paragraph. See paragraph <a href=\"/asc/718/10/#718-10-35-10\" class=\"xref\">718-10-35-10</a> for an exception. </span></span> </div> </div>","snippet":"Exchanges of share options or other equity instruments or changes to their terms in conjunction with an equity restructuring or a business combination are modifications for purposes of this Subtopic. An entity shall appl…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:57aa1dbe10996dbd3f1d37de4392ed2e419b8fe5c9976e14097fab228538031d","downloaded_from":"2026-09-10T01:04:41.973Z","last_downloaded_at":"2026-09-10T01:04:41.973Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481119","source_sha256":"8176ff99adcdf90119f89bfa0d16ad231fd34f01dcb79b0fcfc3afdad37f4742"}},{"citation":"718-20-35-7","para":"35-7","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_CA3EE15E-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The amount of cash or other assets transferred (or liabilities incurred) to repurchase an equity award shall be charged to equity, to the extent that the amount paid does not exceed the fair value of the equity instruments repurchased at the repurchase date. Any excess of the repurchase price over the fair value of the instruments repurchased shall be recognized as additional compensation cost. An entity that repurchases an award for which the promised goods have not been delivered or the service has not been rendered has, in effect, modified the employee's requisite service period </span></span> <span class=\"sfragment\" id=\"sfr_CA3EE26B-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">or nonemployee's vesting period </span></span> <span class=\"sfragment\" id=\"sfr_CA3EE392-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">to the period for which goods have already been delivered or service already has been rendered, and thus the amount of compensation cost measured at the grant date but not yet recognized shall be recognized at the repurchase date. </span></span> </div> </div>","snippet":"The amount of cash or other assets transferred (or liabilities incurred) to repurchase an equity award shall be charged to equity, to the extent that the amount paid does not exceed the fair value of the equity instrumen…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a811c286155e9568d309815b374d42f00c3b9bdaaae9aaecd1350259f2e91f91","downloaded_from":"2026-09-10T01:04:41.973Z","last_downloaded_at":"2026-09-10T01:04:41.973Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481119","source_sha256":"8176ff99adcdf90119f89bfa0d16ad231fd34f01dcb79b0fcfc3afdad37f4742"}},{"citation":"718-20-35-8","para":"35-8","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_CA3EE4D4-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Except as described in paragraph <a href=\"/asc/718/20/#718-20-35-2A\" class=\"xref\">718-20-35-2A</a>, cancellation of an award accompanied by the concurrent grant of (or offer to grant) a <a href=\"/glossary/r/#replacement-award\" class=\"term\" title=\"An award of share-based compensation that is granted (or offered to grant) concurrently with the cancellation of another award.\"><span>replacement award</span></a> or other valuable consideration shall be accounted for as a modification of the terms of the cancelled award. </span></span> <span class=\"sfragment\" id=\"sfr_CA3EE615-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">(The phrase <em class=\"ph i\">offer to grant</em> is intended to cover situations in which the <a href=\"/glossary/s/#service-inception-date\" class=\"term\" title=\"The date at which the employee's requisite service period or the nonemployee's vesting period begins. The service inception date usually is the grant date, but the service inception date may differ from the grant date (see Example 6 [see paragraph 718-10-55-107] for an illustration of the application of this term to an employee award).\"><span>service inception date</span></a> precedes the grant date.) </span></span> <span class=\"sfragment\" id=\"sfr_CA3EE747-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Therefore, incremental compensation cost shall be measured as the excess of the fair value of the replacement award or other valuable consideration over the fair value of the cancelled award at the cancellation date in accordance with paragraph <a href=\"/asc/718/20/#718-20-35-3\" class=\"xref\">718-20-35-3</a>. Thus, the total compensation cost measured at the date of a cancellation and replacement shall be the portion of the grant-date fair value of the original award for which the promised good is expected to be delivered (or has already been delivered) or the service is expected to be rendered (or has already been rendered) at that date plus the incremental cost resulting from the cancellation and replacement. </span></span> </div> </div>","snippet":"Except as described in paragraph 718-20-35-2A, cancellation of an award accompanied by the concurrent grant of (or offer to grant) a replacement award or other valuable consideration shall be accounted for as a modificat…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ace37060ebb3e3bf914b9d9fd8d3b168e1d6b6f4ad66085512f2a28f4fd6e5c4","downloaded_from":"2026-09-10T01:04:41.973Z","last_downloaded_at":"2026-09-10T01:04:41.973Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481119","source_sha256":"8176ff99adcdf90119f89bfa0d16ad231fd34f01dcb79b0fcfc3afdad37f4742"}},{"citation":"718-20-35-9","para":"35-9","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_CA3EE87C-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">A cancellation of an award that is not accompanied by the concurrent grant of (or offer to grant) a replacement award or other valuable consideration shall be accounted for as a repurchase for no consideration. Accordingly, any previously unrecognized compensation cost shall be recognized at the cancellation date. </span></span> </div> </div>","snippet":"A cancellation of an award that is not accompanied by the concurrent grant of (or offer to grant) a replacement award or other valuable consideration shall be accounted for as a repurchase for no consideration. According…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:aeed6ab61326c10f574da571d481fe6a7bdfa37c4fe26fd5c80c7e0f55f4b887","downloaded_from":"2026-09-10T01:04:41.973Z","last_downloaded_at":"2026-09-10T01:04:41.973Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481119","source_sha256":"8176ff99adcdf90119f89bfa0d16ad231fd34f01dcb79b0fcfc3afdad37f4742"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9c46c118e01e56d3cbaca249daa9b804d5241c889e98a9ac4ffb113762f1fe55","downloaded_from":"2026-09-10T01:04:41.973Z","last_downloaded_at":"2026-09-10T01:04:41.973Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481119","source_sha256":"8176ff99adcdf90119f89bfa0d16ad231fd34f01dcb79b0fcfc3afdad37f4742"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3f1c09867ccf19c11ad58863de78b24063f9aa9c31d20675618268fa1fe74a38","downloaded_from":"2026-09-10T01:04:41.973Z","last_downloaded_at":"2026-09-10T01:04:41.973Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481119","source_sha256":"8176ff99adcdf90119f89bfa0d16ad231fd34f01dcb79b0fcfc3afdad37f4742"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3f1c09867ccf19c11ad58863de78b24063f9aa9c31d20675618268fa1fe74a38","downloaded_from":"2026-09-10T01:04:41.973Z","last_downloaded_at":"2026-09-10T01:04:41.973Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481119","source_sha256":"8176ff99adcdf90119f89bfa0d16ad231fd34f01dcb79b0fcfc3afdad37f4742"}}