{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/718/40/#55-implementation-guidance-and-illustrations","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":"718-40","subtopic_title":"Employee Stock Ownership Plans","section":{"number":"55","label":"55 Implementation Guidance and Illustrations","anchor":"55-implementation-guidance-and-illustrations","is_sec":false,"groups":[{"block":null,"heading":"Illustrations","paragraphs":[{"citation":"718-40-55-1","para":"55-1","html":"
This Section contains illustrations of the requirements of this Subtopic for employers with employee stock ownership plans.
","snippet":"This Section contains illustrations of the requirements of this Subtopic for employers with employee stock ownership plans.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:408ad4a8958a075fba81cbe4171f2e8401688a04a73722236cbb41dde9b65fb9","downloaded_from":"2026-09-10T01:05:47.367Z","last_downloaded_at":"2026-09-10T01:05:47.367Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480459","source_sha256":"b0de0e683b6708a7848e16292670d58b44ac8ea93c18f9831b8f82ae647393a7"}},{"citation":"718-40-55-2","para":"55-2","html":"
The Examples do not address all possible circumstances that may arise in applying the guidance in this Subtopic. The Examples are for annual reporting periods and, accordingly, do not demonstrate the application of the Subtopic to interim financial statements. However, depending on the circumstances, many of the journal entries illustrated would be made for interim financial statements.
","snippet":"The Examples do not address all possible circumstances that may arise in applying the guidance in this Subtopic. The Examples are for annual reporting periods and, accordingly, do not demonstrate the application of the S…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:bc0caa40067a6e9fb0d302b0bcf433a73d5dc76f18d0fc56b5b7fbe794736075","downloaded_from":"2026-09-10T01:05:47.367Z","last_downloaded_at":"2026-09-10T01:05:47.367Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480459","source_sha256":"b0de0e683b6708a7848e16292670d58b44ac8ea93c18f9831b8f82ae647393a7"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0ab8fc727fa93ef17eef9195299c3b8137a24bb0c249bf1dfb8217f5c4bb0023","downloaded_from":"2026-09-10T01:05:47.367Z","last_downloaded_at":"2026-09-10T01:05:47.367Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480459","source_sha256":"b0de0e683b6708a7848e16292670d58b44ac8ea93c18f9831b8f82ae647393a7"}},{"block":"Leveraged Employee Stock Ownership Plans","heading":"Illustrations","paragraphs":[{"citation":"718-40-55-3","para":"55-3","html":"
The following Cases illustrate the guidance in paragraphs
718-40-25-7 through 25-17
;
718-40-30-1 through 30-4
; 718-40-35-1;
718-40-40-1 through 40-7
; and
718-40-45-3 through 45-8
:
  1. a
    A common-stock leveraged employee stock ownership plan with a direct loan (Case A)
  2. b
    A common-stock leveraged employee stock ownership plan used to fund the employer's match of a 401(k) savings plan with an indirect loan (Case B)
  3. c
    A convertible-preferred-stock leveraged employee stock ownership plan with a direct loan (Case C).
","snippet":"The following Cases illustrate the guidance in paragraphs 718-40-25-7 through 25-17; 718-40-30-1 through 30-4; 718-40-35-1; 718-40-40-1 through 40-7; and 718-40-45-3 through 45-8:\n(a) A common-stock leveraged employee st…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:879d81b8e9bfe5daa756cb3459fe27c322d6b77e73eac9b7cd54bf79f111b4b2","downloaded_from":"2026-09-10T01:05:47.367Z","last_downloaded_at":"2026-09-10T01:05:47.367Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480459","source_sha256":"b0de0e683b6708a7848e16292670d58b44ac8ea93c18f9831b8f82ae647393a7"}},{"citation":"718-40-55-4","para":"55-4","html":"
This Case illustrates a common stock leveraged employee stock ownership plan with a direct loan. This Case has the following assumptions:
  1. a
    On January 1, Year 1, Entity A establishes a leveraged employee stock ownership plan.
  2. b
    The employee stock ownership plan borrows $1,000,000 from an outside lender at 10 percent for 5 years and uses the proceeds to buy 100,000 shares of newly issued common stock of the sponsor for $10 per share, which is the market price of those shares on the date of issuance.
  3. c
    Debt service is funded by cash contributions and dividends on employer stock held by the employee stock ownership plan.
  4. d
    Dividends on all shares held by the employee stock ownership plan are used for debt service.
  5. e
    Cash contributions are made at the end of each year.
  6. f
    The year-end and average market values of a share of common stock follow.
    • \"
      Year Year-End Average 1 $11.50 $10.75 2 9.00 10.25 3 10.00 9.50 4 12.00 11.00 5 14.40 13.20
  7. g
    The common stock pays normal dividends at the end of each quarter of 12.5 cents per share ($50,000 for the employee stock ownership plan's shares each year). Accordingly, in this Case, the average fair value of shares is used to determine the number of shares used to satisfy the employers' obligation to replace dividends on allocated shares used for debt service.
  8. h
    Principal and interest are payable in equal annual installments at the end of each year. Debt service is as follows.
    • \"
      Year Principal Interest Total Debt Services 1 \" $163,800 \" \" $100,000 \" \" $263,800 \" 2 \" 180,200 \" \" 83,600 \" \" 263,800 \" 3 \" 198,200 \" \" 65,600 \" \" 263,800 \" 4 \" 218,000 \" \" 45,800 \" \" 263,800 \" 5 \" 239,800 \" \" 24,000 \" \" 263,800 \" \" $1,000,000 \" \" $319,000 \" \" $1,319,000 \"
  9. i
    The number of shares released each year is as follows.
    • \"
      Year Dividends Compensation Total 1 0 \"20,000\" \"20,000\" 2 976 \"19,024\" \"20,000\" 3 \"2,105\" \"17,895\" \"20,000\" 4 \"2,727\" \"17,273\" \"20,000\" 5 \"3,030\" \"16,970\" \"20,000\"\t
  10. j
    The number of shares released for dividends is determined by dividing the amount of dividends on allocated shares by the average fair value of a share of common stock (for Year 2: $10,000 divided by $10.25 equals 976 shares). In this illustration, the remaining shares are released for compensation (for Year 2: 20,000 less 976 equals 19,024 shares).
  11. k
    Shares are released from the suspense account for allocation to participants' accounts based on a principal-plus-interest formula. The released shares are allocated to participant accounts the following year. Shares released and allocated follow.
    • \"
      Cumulative Number of Shares Average Shares Released Year-End Suspense Shares Year Released Allocated 1 \" 20,000\" 0 \"10,000 \" \"80,000 \" 2 \" 40,000\" \"20,000 \" \"30,000 \" \"60,000 \" 3 \" 60,000\" \"40,000 \" \"50,000 \" \"40,000 \" 4 \" 80,000\" \"60,000 \" \"70,000 \" \"20,000 \" 5 \"100,000 \" \"80,000 \" \"90,000 \" 0\t
  12. l
    Income before employee stock ownership plan related charges is as follows.
    • \"
      Year Income 1 \" $1,800,000 \" 2 \" 1,900,000 \" 3 \" 2,000,000 \" 4 \" 2,100,000 \" 5 \" 2,200,000 \"\t
  13. m
    All interest cost and compensation cost are charged to expense each year.
  14. n
    Excluding employee stock ownership plan shares, 1,000,000 shares are outstanding on average each year.
  15. o
    Entity A follows the guidance in Subtopic 740-10.
  16. p
    Entity A's combined statutory tax rate is 40 percent each year.
  17. q
    Entity A's only book-tax differences are those associated with its employee stock ownership plan.
  18. r
    No valuation allowance is necessary for deferred tax assets.
","snippet":"This Case illustrates a common stock leveraged employee stock ownership plan with a direct loan. This Case has the following assumptions:\n(a) On January 1, Year 1, Entity A establishes a leveraged employee stock ownershi…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5374bc566fb9b8ad6d91dacf040ba5696b85d1959bc0e611677a891669c941ae","downloaded_from":"2026-09-10T01:05:47.367Z","last_downloaded_at":"2026-09-10T01:05:47.367Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480459","source_sha256":"b0de0e683b6708a7848e16292670d58b44ac8ea93c18f9831b8f82ae647393a7"}},{"citation":"718-40-55-5","para":"55-5","html":"
The following table sets forth Entity A's employee stock ownership plan-related information. All amounts represent changes (credits in parentheses) in account balances.
","snippet":"The following table sets forth Entity A's employee stock ownership plan-related information. All amounts represent changes (credits in parentheses) in account balances.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:40dd6eaee4951631be9a83b9e90f6fb6cd18dccc55b4930ca604e0795c6cf872","downloaded_from":"2026-09-10T01:05:47.367Z","last_downloaded_at":"2026-09-10T01:05:47.367Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480459","source_sha256":"b0de0e683b6708a7848e16292670d58b44ac8ea93c18f9831b8f82ae647393a7"}},{"citation":"718-40-55-6","para":"55-6","html":"
Entity A would record journal entries from inception through Year 5 as follows.
","snippet":"Entity A would record journal entries from inception through Year 5 as follows.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:dd5c7121cb0af9c7d3c9cd9104e979dd259376401ab7a4b6b48b2ad3d71a84b3","downloaded_from":"2026-09-10T01:05:47.367Z","last_downloaded_at":"2026-09-10T01:05:47.367Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480459","source_sha256":"b0de0e683b6708a7848e16292670d58b44ac8ea93c18f9831b8f82ae647393a7"}},{"citation":"718-40-55-7","para":"55-7","html":"
Assuming Entity A terminates its employee stock ownership plan at the end of Year 2 (when the fair value of the suspense shares is $540,000 [60,000 shares multiplied by $9 per share], the unearned employee stock ownership plan share balance is $600,000, and the unpaid debt balance is $656,000), and assuming the suspense shares are sold to pay down the debt, Entity A would make the following journal entry.
","snippet":"Assuming Entity A terminates its employee stock ownership plan at the end of Year 2 (when the fair value of the suspense shares is $540,000 [60,000 shares multiplied by $9 per share], the unearned employee stock ownershi…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:519e311d36079f5fce00e06ed136d0dd4231189c45cc8c75acd866f0cb21cd4a","downloaded_from":"2026-09-10T01:05:47.367Z","last_downloaded_at":"2026-09-10T01:05:47.367Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480459","source_sha256":"b0de0e683b6708a7848e16292670d58b44ac8ea93c18f9831b8f82ae647393a7"}},{"citation":"718-40-55-8","para":"55-8","html":"
The following tables set forth Entity A's tax (assuming no termination) and earnings per share (EPS) computations.
","snippet":"The following tables set forth Entity A's tax (assuming no termination) and earnings per share (EPS) computations.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d40289922141fdfad409b6c4fc73f3ae8062e69c2985c8cd9a17b629a9b2d626","downloaded_from":"2026-09-10T01:05:47.367Z","last_downloaded_at":"2026-09-10T01:05:47.367Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480459","source_sha256":"b0de0e683b6708a7848e16292670d58b44ac8ea93c18f9831b8f82ae647393a7"}},{"citation":"718-40-55-9","para":"55-9","html":"
The entity would provide the following disclosures for the end of Year 3.
","snippet":"The entity would provide the following disclosures for the end of Year 3.\nThe entity sponsors a leveraged employee stock ownership plan that covers all U.S. employees who work 20 or more hours per week. The entity makes …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9535e2ec7b88ac529755cbc5785040f0c671c0acc6ae4c41ebe31f67a94d63b0","downloaded_from":"2026-09-10T01:05:47.367Z","last_downloaded_at":"2026-09-10T01:05:47.367Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480459","source_sha256":"b0de0e683b6708a7848e16292670d58b44ac8ea93c18f9831b8f82ae647393a7"}},{"citation":"718-40-55-10","para":"55-10","html":"
This Case illustrates a common stock leveraged employee stock ownership plan used to fund the employer's match of a 401(k) savings plan with an indirect loan. On January 1, Year 1, Entity B established an employee stock ownership plan to fund the employer's match of its savings plan. All of the assumptions are the same as those outlined in Case A for Entity A, except as follows:
  1. a
    Entity B loaned its employee stock ownership plan $1,000,000 and concurrently obtained a related loan. The terms of both lending arrangements are the same as for Case A's outside loan.
  2. b
    Entity B uses shares released by the employee stock ownership plan to satisfy its matching obligation of 50 percent of voluntary employee contributions to the savings plan. The average fair value of the shares for each year is used to determine the number of shares necessary to satisfy the matching obligation.
  3. c
    If the fair value of the shares released is less than Entity B's matching obligation, Entity B contributes additional newly issued shares to the employee stock ownership plan to satisfy the remaining obligation.
  4. d
    Shares used to replace dividends on allocated shares used to service debt do not count toward the employer's match.
  5. e
    The employee contributions, required employer match, and the number of shares needed to fund the employee match follow.
    • \"
      Year Employee Contributions Employer Match Number of Shares 1 \" $400,000 \" \" $200,000 \" \"18,605\" 2 \" 410,000 \" \" 205,000 \" \"20,000\" 3 \" 420,000 \" \" 210,000 \" \"22,105\" 4 \" 430,000 \" \" 215,000 \" \"19,545\" 5 \" 440,000 \" \" 220,000 \" \"16,667\"
    Note that the number of shares needed to satisfy the employer's matching obligation is determined by dividing the matching obligation by the average fair value of a share of common stock (for Year 1: $200,000 divided by $10.75 [see above table for average fair values] equals 18,605 shares).
","snippet":"This Case illustrates a common stock leveraged employee stock ownership plan used to fund the employer's match of a 401(k) savings plan with an indirect loan. On January 1, Year 1, Entity B established an employee stock …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1d7a0d01ba2b5e089d262ea21cdba7c7c13fa75b6b4b5c1d25a15dccb27e42e0","downloaded_from":"2026-09-10T01:05:47.367Z","last_downloaded_at":"2026-09-10T01:05:47.367Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480459","source_sha256":"b0de0e683b6708a7848e16292670d58b44ac8ea93c18f9831b8f82ae647393a7"}},{"citation":"718-40-55-11","para":"55-11","html":"
The 20,000 shares released each year based on debt service payments follow.
","snippet":"The 20,000 shares released each year based on debt service payments follow.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7d0751f4ac26565031304fdb8522e3f4d837af02ae9ee91ece7c3c16974ca465","downloaded_from":"2026-09-10T01:05:47.367Z","last_downloaded_at":"2026-09-10T01:05:47.367Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480459","source_sha256":"b0de0e683b6708a7848e16292670d58b44ac8ea93c18f9831b8f82ae647393a7"}},{"citation":"718-40-55-12","para":"55-12","html":"
Cumulative share amounts follow.
","snippet":"Cumulative share amounts follow.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6bf11d939707a53d4e2d84d365e9ffeabc55f5b8721d11f1204538a50ddae10a","downloaded_from":"2026-09-10T01:05:47.367Z","last_downloaded_at":"2026-09-10T01:05:47.367Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480459","source_sha256":"b0de0e683b6708a7848e16292670d58b44ac8ea93c18f9831b8f82ae647393a7"}},{"citation":"718-40-55-13","para":"55-13","html":"
Note that dividends on top-up shares are paid in cash. Cumulative shares released include top-up shares.
","snippet":"Note that dividends on top-up shares are paid in cash. Cumulative shares released include top-up shares.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ca9f1b7b48812a4bac9cabc3be47a2526cf36bc773c72b3737f8d19291952aea","downloaded_from":"2026-09-10T01:05:47.367Z","last_downloaded_at":"2026-09-10T01:05:47.367Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480459","source_sha256":"b0de0e683b6708a7848e16292670d58b44ac8ea93c18f9831b8f82ae647393a7"}},{"citation":"718-40-55-14","para":"55-14","html":"
The following table sets forth Entity B's employee stock ownership plan related information. All amounts represent changes (credits in parentheses) in account balances.
","snippet":"The following table sets forth Entity B's employee stock ownership plan related information. All amounts represent changes (credits in parentheses) in account balances.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4c0041a953742b8aaf548ac2b1eed750af8a4112f426470636c2f2e30cea3b76","downloaded_from":"2026-09-10T01:05:47.367Z","last_downloaded_at":"2026-09-10T01:05:47.367Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480459","source_sha256":"b0de0e683b6708a7848e16292670d58b44ac8ea93c18f9831b8f82ae647393a7"}},{"citation":"718-40-55-15","para":"55-15","html":"
Entity B would record journal entries from inception through Year 2 as follows.
","snippet":"Entity B would record journal entries from inception through Year 2 as follows.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:82027a03ed2212991418bba402fb08dfa874891d576fc8bae88d5925a724044b","downloaded_from":"2026-09-10T01:05:47.367Z","last_downloaded_at":"2026-09-10T01:05:47.367Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480459","source_sha256":"b0de0e683b6708a7848e16292670d58b44ac8ea93c18f9831b8f82ae647393a7"}},{"citation":"718-40-55-16","para":"55-16","html":"
Note that the journal entry differs from Case A because Entity B receives an additional $10,000 deduction ($4,000 tax benefit) for the 976 top-up shares.
","snippet":"Note that the journal entry differs from Case A because Entity B receives an additional $10,000 deduction ($4,000 tax benefit) for the 976 top-up shares.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0db6931ee18b017f6ccee5474bf0733b54746a5780542d3b886510959c3b84f7","downloaded_from":"2026-09-10T01:05:47.367Z","last_downloaded_at":"2026-09-10T01:05:47.367Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480459","source_sha256":"b0de0e683b6708a7848e16292670d58b44ac8ea93c18f9831b8f82ae647393a7"}},{"citation":"718-40-55-17","para":"55-17","html":"
Assuming Entity B terminated its employee stock ownership plan at the end of Year 4 (when the fair value of the suspense shares is $240,000, the unearned employee stock ownership plan shares balance is $200,000, and the unpaid debt balance is $239,800), and assuming the employer buys back the suspense shares in an amount equal to the debt balance, there will be 17 suspense shares left, which must be allocated to participants. (In this Case the shares are used to partially satisfy the employer's 401(k) matching obligation.) Entity B would make the following journal entry.
","snippet":"Assuming Entity B terminated its employee stock ownership plan at the end of Year 4 (when the fair value of the suspense shares is $240,000, the unearned employee stock ownership plan shares balance is $200,000, and the …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1689ebf9d02b85876f135692c64511167c0771bb6eb41113606371693647ef1a","downloaded_from":"2026-09-10T01:05:47.367Z","last_downloaded_at":"2026-09-10T01:05:47.367Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480459","source_sha256":"b0de0e683b6708a7848e16292670d58b44ac8ea93c18f9831b8f82ae647393a7"}},{"citation":"718-40-55-18","para":"55-18","html":"
In this Case, Entity B's taxes would be computed the same way as Case A. For Entity B the average number of employee stock ownership plan shares outstanding would be as follows.
","snippet":"In this Case, Entity B's taxes would be computed the same way as Case A. For Entity B the average number of employee stock ownership plan shares outstanding would be as follows.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2e11ecd58d96b8f991b0a1da60e10ebe35ffab1802b464111c1515cee910fc60","downloaded_from":"2026-09-10T01:05:47.367Z","last_downloaded_at":"2026-09-10T01:05:47.367Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480459","source_sha256":"b0de0e683b6708a7848e16292670d58b44ac8ea93c18f9831b8f82ae647393a7"}},{"citation":"718-40-55-19","para":"55-19","html":"
This represents the cumulative numbers of shares released at the beginning of the year plus the end of the year (see the table in the preceding paragraph) divided by 2.
","snippet":"This represents the cumulative numbers of shares released at the beginning of the year plus the end of the year (see the table in the preceding paragraph) divided by 2.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f5549275f5737f5318fc1dec46c4cb7d5c64e5892addf168897957613b1582fd","downloaded_from":"2026-09-10T01:05:47.367Z","last_downloaded_at":"2026-09-10T01:05:47.367Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480459","source_sha256":"b0de0e683b6708a7848e16292670d58b44ac8ea93c18f9831b8f82ae647393a7"}},{"citation":"718-40-55-20","para":"55-20","html":"
The entity would provide the following disclosures for the end of Year 3.
","snippet":"The entity would provide the following disclosures for the end of Year 3.\nThe entity sponsors a 401(k) savings plan under which eligible U.S. employees may choose to save up to 6 percent of salary income on a pretax basi…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:67599b28783ebf8323fbef311e1ac8c7ca274a4646034f9c9ee97acdb8b260cf","downloaded_from":"2026-09-10T01:05:47.367Z","last_downloaded_at":"2026-09-10T01:05:47.367Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480459","source_sha256":"b0de0e683b6708a7848e16292670d58b44ac8ea93c18f9831b8f82ae647393a7"}},{"citation":"718-40-55-21","para":"55-21","html":"
This Case illustrates a convertible preferred stock leveraged employee stock ownership plan with a direct loan. On January 1, Year 1, Entity D established an employee stock ownership plan with convertible preferred stock. The assumptions are as follows:
  1. a
    The borrowing, debt service, earnings, and tax assumptions are the same as those for Entity A outlined in Case A.
  2. b
    On January 1, Year 1, the employee stock ownership plan used the proceeds of the debt to buy 80,000 shares of newly issued convertible preferred stock of Entity D for $12.50 per share.
  3. c
    The preferred stock pays dividends quarterly at an annual rate of $1.25 per share ($100,000 each year for the employee stock ownership plan shares). Accordingly, in this Case the average fair value of the shares is used to determine the number of shares used to satisfy the employer's obligation to replace dividends on allocated shares used for debt service.
  4. d
    All dividends on employee stock ownership plan shares are used for debt service.
  5. e
    The preferred stock is convertible into common stock at 1:1 ratio.
  6. f
    Participants may not withdraw the convertible preferred stock from the employee stock ownership plan. When participants become eligible to withdraw shares from their account, they must either convert to common stock or redeem the preferred shares.
  7. g
    The preferred stock has a guaranteed minimum redemption value of $12.50 per share, to be paid in shares of common stock.
  8. h
    The preferred stock is callable at $13.00 per share.
  9. i
    There is one vote per preferred share.
  10. j
    The year-end and average fair values of a share of preferred stock (fair value is assumed to be greater than or equal to minimum value) follow.
    • \"
      Year Year-End Average 1 $12.50 $12.50 2 12.50 12.50 3 12.50 12.50 4 12.50 12.50 5 14.40 13.20
","snippet":"This Case illustrates a convertible preferred stock leveraged employee stock ownership plan with a direct loan. On January 1, Year 1, Entity D established an employee stock ownership plan with convertible preferred stock…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b9b273de2bb4604f2faf075eb65c0c0074ecd15d00f7e7c0dea3b588b867e671","downloaded_from":"2026-09-10T01:05:47.367Z","last_downloaded_at":"2026-09-10T01:05:47.367Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480459","source_sha256":"b0de0e683b6708a7848e16292670d58b44ac8ea93c18f9831b8f82ae647393a7"}},{"citation":"718-40-55-22","para":"55-22","html":"
The shares released each year follow.
","snippet":"The shares released each year follow.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:05c1fbca1bbfd28921b5991446404474861c4221660d1439752def1ce2a64d86","downloaded_from":"2026-09-10T01:05:47.367Z","last_downloaded_at":"2026-09-10T01:05:47.367Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480459","source_sha256":"b0de0e683b6708a7848e16292670d58b44ac8ea93c18f9831b8f82ae647393a7"}},{"citation":"718-40-55-23","para":"55-23","html":"
Note that the number of shares released for dividends is determined by dividing the amount of dividends on allocated shares (16,000 multiplied by $1.25 in Year 2; 32,000 multiplied by $1.25 in Year 3; and so forth) by the average fair value of a share of preferred stock ($12.50 in Years 2 and 3). In this illustration the remaining shares are released for compensation (16,000 less 1,600 in Year 2, 16,000 less 3,200 in Year 3, and so forth).
","snippet":"Note that the number of shares released for dividends is determined by dividing the amount of dividends on allocated shares (16,000 multiplied by $1.25 in Year 2; 32,000 multiplied by $1.25 in Year 3; and so forth) by th…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a983154f51ef3224ddb1d863f2b2ba8edf1f1f213c8ed39ad8690a2c459bccfa","downloaded_from":"2026-09-10T01:05:47.367Z","last_downloaded_at":"2026-09-10T01:05:47.367Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480459","source_sha256":"b0de0e683b6708a7848e16292670d58b44ac8ea93c18f9831b8f82ae647393a7"}},{"citation":"718-40-55-24","para":"55-24","html":"
Additional share information follows.
","snippet":"Additional share information follows.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e7e7202413deaf14ac50842f8b05ba250bdbea3e7577d0e2fc63dae606ca2c55","downloaded_from":"2026-09-10T01:05:47.367Z","last_downloaded_at":"2026-09-10T01:05:47.367Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480459","source_sha256":"b0de0e683b6708a7848e16292670d58b44ac8ea93c18f9831b8f82ae647393a7"}},{"citation":"718-40-55-25","para":"55-25","html":"
The following chart sets forth Entity D's employee stock ownership plan related information. All amounts represent changes (credits in parentheses) in account balances.
","snippet":"The following chart sets forth Entity D's employee stock ownership plan related information. All amounts represent changes (credits in parentheses) in account balances.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:daa895f4da1d94c25853adfffdc970fd0d5c011a3b3727dc1ed9accf65a40bdf","downloaded_from":"2026-09-10T01:05:47.367Z","last_downloaded_at":"2026-09-10T01:05:47.367Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480459","source_sha256":"b0de0e683b6708a7848e16292670d58b44ac8ea93c18f9831b8f82ae647393a7"}},{"citation":"718-40-55-26","para":"55-26","html":"
The journal entries to reflect the accounting for Entity D's employee stock ownership plan from inception through Year 2 are as follows.
","snippet":"The journal entries to reflect the accounting for Entity D's employee stock ownership plan from inception through Year 2 are as follows.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4d7b274ecaa7384b6053b9b495aec64f0c395016f73f5ca3d2348ba749be3bea","downloaded_from":"2026-09-10T01:05:47.367Z","last_downloaded_at":"2026-09-10T01:05:47.367Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480459","source_sha256":"b0de0e683b6708a7848e16292670d58b44ac8ea93c18f9831b8f82ae647393a7"}},{"citation":"718-40-55-27","para":"55-27","html":"
The tax and EPS calculations for Entity D follow.
","snippet":"The tax and EPS calculations for Entity D follow.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1b00d364b4494e94830b8cd26d06f39b56103621985c820d878f194f2cd6381f","downloaded_from":"2026-09-10T01:05:47.367Z","last_downloaded_at":"2026-09-10T01:05:47.367Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480459","source_sha256":"b0de0e683b6708a7848e16292670d58b44ac8ea93c18f9831b8f82ae647393a7"}},{"citation":"718-40-55-28","para":"55-28","html":"
If-converted computation.
","snippet":"If-converted computation.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:20f24bb5a60d2678851d3b48a88548a34593a004126ff6c072de93f09f277060","downloaded_from":"2026-09-10T01:05:47.367Z","last_downloaded_at":"2026-09-10T01:05:47.367Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480459","source_sha256":"b0de0e683b6708a7848e16292670d58b44ac8ea93c18f9831b8f82ae647393a7"}},{"citation":"718-40-55-29","para":"55-29","html":"
Computations for (1), (2), and (3) follow.
","snippet":"Computations for (1), (2), and (3) follow.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9e0296d4c6c477df106fb774bb68aa1b7bcffc7cb3bada467bcd48c242845757","downloaded_from":"2026-09-10T01:05:47.367Z","last_downloaded_at":"2026-09-10T01:05:47.367Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480459","source_sha256":"b0de0e683b6708a7848e16292670d58b44ac8ea93c18f9831b8f82ae647393a7"}},{"citation":"718-40-55-30","para":"55-30","html":"
This Example illustrates the guidance in paragraphs
718-40-25-7 through 25-17
;
718-40-30-1 through 30-4
; 718-40-35-1;
718-40-40-1 through 40-7
; and
718-40-45-3 through 45-8
for a convertible preferred stock leveraged employee stock ownership plan used to fund a 401(k) savings plan with an employer loan. This Example has the following assumptions:
  1. a
    On January 1, Year 1, Entity E established a leveraged employee stock ownership plan with convertible preferred stock.
  2. b
    The employee stock ownership plan borrowed $1,000,000 from the employer at 10 percent for 5 years and used the proceeds to buy 80,000 shares of newly issued convertible preferred stock of Entity E for $12.50 per share.
  3. c
    Debt service is funded by cash contributions and dividends on employer stock held by the employee stock ownership plan.
  4. d
    Dividends on all of the original 80,000 shares held by the employee stock ownership plan are used for debt service.
  5. e
    Cash contributions are made at the end of each year.
  6. f
    The preferred stock pays dividends quarterly at an annual rate of $1.25 per share ($100,000 each year for the employee stock ownership plan's shares). Accordingly, in this Example, the average fair value of the shares is used to determine the number of shares used to satisfy the employer's obligation to replace dividends on allocated shares used for debt service.
  7. g
    The preferred stock is convertible at a 1:1 ratio into common stock.
  8. h
    Participants may not withdraw the convertible preferred stock from the employee stock ownership plan. When participants become eligible to withdraw shares from their account, they must either convert to common stock or redeem the preferred shares.
  9. i
    The preferred stock has a guaranteed minimum redemption value of $12.50 per share, to be paid in shares of common stock.
  10. j
    The preferred stock is callable at $13.00 per share.
  11. k
    There is one vote per preferred share.
  12. l
    The year-end and average fair values of a share of preferred stock (fair value is assumed to be greater than or equal to minimum value) follow.
    • \"
      Year Year-End Average 1 $12.50 $12.50 2 12.50 12.50 3 12.50 12.50 4 12.50 12.50 5 14.40 13.20
  13. m
    Entity E uses shares released by the employee stock ownership plan to satisfy its matching obligation of 50 percent of voluntary employee contributions to the savings plan. The fair value of the shares at the end of each month is used to determine the number of shares necessary to satisfy the matching obligation. (Accordingly, in this Example, average fair values are used to determine the number of shares needed to satisfy the employer's liabilities.)
  14. n
    If the fair value of the shares released is less than Entity E's matching obligation, Entity E contributes additional newly issued shares (top-up shares) to the employee stock ownership plan to satisfy the remaining obligation. The top-up shares are issued at the end of the year. Dividends on the top-up shares are paid in cash.
  15. o
    Shares that replace dividends on allocated shares used to service debt do not count toward the employer's match.
  16. p
    The employee contributions, required employer match, and the number of shares needed to fund the employee match follow.
    • \"
      Year Employee Contributions Employer Match Number of Shares 1 \" $400,000 \" \" $200,000 \" \"16,000\" 2 \" 410,000 \" \" 205,000 \" \"16,400\" 3 \" 420,000 \" \" 210,000 \" \"16,800\" 4 \" 430,000 \" \" 215,000 \" \"17,200\" 5 \" 440,000 \" \" 220,000 \" \"16,667\"\t
    Note that the number of shares needed to satisfy the employer's matching obligation is determined by dividing the matching obligation by the average fair value of a share of common stock (for Year 1: $200,000 divided by $12.50 equals 16,000 shares).
  17. q
    Principal and interest are payable in annual installments at the end of each year. Debt service is as follows.
    • \"
      Year Principal Interest Total Debt Service 1 \" $ 110,000 \" \" $ 100,000 \" \" $ 210,000 \" 2 \" 150,000 \" \" 89,000 \" \" 239,000 \" 3 \" 200,000 \" \" 74,000 \" \" 274,000 \" 4 \" 250,000 \" \" 54,000 \" \" 304,000 \" 5 \" 290,000 \" \" 29,000 \" \" 319,000 \" Total \" $1,000,000 \" \" $346,000 \" \" $1,346,000 \"
  18. r
    Shares are released from the suspense account for allocation to participants' accounts based on a principal-plus-interest formula. The released shares are allocated to participants' accounts at the beginning of the following year. Shares are assumed to be released ratably throughout the year.
  19. s
    The shares released each year follow.
    • \"
      Year Number of Shares Needed to Satisfy 401(k) Liability Total Released Shares Released for Dividends Employee Stock Ownership Plan Shares Available to Satisfy 401(k) Liability Additional Shares (Top-Up) 1 \"16,000\" \"12,481\" 0 \"12,481\" \"3,519\" 2 \"16,400\" \"14,205\" 1248 \"12,957\" \"3,443\" 3 \"16,800\" \"16,286\" 2669 \"13,617\" \"3,183\" 4 \"17,200\" \"18,068\" 4297 \"13,771\" \"3,429\" 5 \"16,667\" \"18,960\" 5780 \"13,180\" \"3,487\"\t
    Note that the number of shares released for dividends is determined by dividing the amount of dividends on allocated shares (12,481 multiplied by $1.25 in Year 2; 26,686 multiplied by $1.25 in Year 3, and so forth) by the average fair value of a share of preferred stock ($12.50 in Years 2 and 3). In this example, the remaining shares are released for compensation (14,205 less 1,248 in Year 2; 16,286 less 2,669 in Year 3, and so forth).
  20. t
    Additional share information follows.
    • \"
      Initial Employee Stock Ownership Plan Shares Top-Up Shares Average Shares Released or Issuable Total Shares Allocated Year-End Suspense Shares Cumulative Shares Cumulative Shares Year Released Allocated Issuable Issued 1 \"12,481\" 0 \" 3,519\" 0 \" 8,000\" 0 \"67,519\" 2 \"26,686\" \"12,481\" \" 6,962\" \" 3,519\" \"24,824\" \"16,000\" \"53,314\" 3 \"42,972\" \"26,686\" \"10,145\" \" 6,962\" \"43,383\" \"33,648\" \"37,028\" 4 \"61,040\" \"42,972\" \"13,574\" 10145 \"63,866\" \"53,117\" \"18,960\" 5 \"80,000\" \"61,040\" \"17,061\" 13574 \"85,838\" \"74,614\" 0
  21. u
    The pre-employee stock ownership plan income, shares outstanding, and income tax assumptions are the same as for Example 1 (see paragraph 718-40-55-3).
","snippet":"This Example illustrates the guidance in paragraphs 718-40-25-7 through 25-17; 718-40-30-1 through 30-4; 718-40-35-1; 718-40-40-1 through 40-7; and 718-40-45-3 through 45-8 for a convertible preferred stock leveraged emp…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a0deb81cc52ce29ebd89858cf70694cda8b34e27c867810caf450a4ac8c0ca35","downloaded_from":"2026-09-10T01:05:47.367Z","last_downloaded_at":"2026-09-10T01:05:47.367Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480459","source_sha256":"b0de0e683b6708a7848e16292670d58b44ac8ea93c18f9831b8f82ae647393a7"}},{"citation":"718-40-55-31","para":"55-31","html":"
The following chart sets forth Entity E's employee stock ownership plan related information. All amounts represent changes (credits are in parentheses) in account balances.
","snippet":"The following chart sets forth Entity E's employee stock ownership plan related information. All amounts represent changes (credits are in parentheses) in account balances.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c9489502b6eab9ea82372ab8b68b04073b94ca80168786b15344e78ed26e2a52","downloaded_from":"2026-09-10T01:05:47.367Z","last_downloaded_at":"2026-09-10T01:05:47.367Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480459","source_sha256":"b0de0e683b6708a7848e16292670d58b44ac8ea93c18f9831b8f82ae647393a7"}},{"citation":"718-40-55-32","para":"55-32","html":"
The journal entries to reflect the accounting for Entity E's employee stock ownership plan from inception through Year 2 are as follows.
","snippet":"The journal entries to reflect the accounting for Entity E's employee stock ownership plan from inception through Year 2 are as follows.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:67232a54f6c20bd7679f672a6f2f74054878e04333254103250d262d844e4cfb","downloaded_from":"2026-09-10T01:05:47.367Z","last_downloaded_at":"2026-09-10T01:05:47.367Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480459","source_sha256":"b0de0e683b6708a7848e16292670d58b44ac8ea93c18f9831b8f82ae647393a7"}},{"citation":"718-40-55-33","para":"55-33","html":"
The tax and earnings per share (EPS) computations for Entity E follow.
","snippet":"The tax and earnings per share (EPS) computations for Entity E follow.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:78ef8598e543601bef0a4b0bc55249e420b2f678a864e312199e85544eb5696a","downloaded_from":"2026-09-10T01:05:47.367Z","last_downloaded_at":"2026-09-10T01:05:47.367Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480459","source_sha256":"b0de0e683b6708a7848e16292670d58b44ac8ea93c18f9831b8f82ae647393a7"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:24b5bdf55b9051b04fd854af90a4900aa072b17aac9c0705f226d6a0616a9fd0","downloaded_from":"2026-09-10T01:05:47.367Z","last_downloaded_at":"2026-09-10T01:05:47.367Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480459","source_sha256":"b0de0e683b6708a7848e16292670d58b44ac8ea93c18f9831b8f82ae647393a7"}},{"block":"Nonleveraged Employee Stock Ownership Plans","heading":"Illustrations","paragraphs":[{"citation":"718-40-55-34","para":"55-34","html":"
This Example illustrates the guidance in paragraphs 718-40-25-2;
718-40-25-18 through 25-21
; 718-40-30-5; and 718-40-45-9 for a common stock nonleveraged employee stock ownership plan.
","snippet":"This Example illustrates the guidance in paragraphs 718-40-25-2; 718-40-25-18 through 25-21; 718-40-30-5; and 718-40-45-9 for a common stock nonleveraged employee stock ownership plan.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b262b826eb7b4eb95305f36551772bb6a827b3029a9f3942b670d4e997661016","downloaded_from":"2026-09-10T01:05:47.367Z","last_downloaded_at":"2026-09-10T01:05:47.367Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480459","source_sha256":"b0de0e683b6708a7848e16292670d58b44ac8ea93c18f9831b8f82ae647393a7"}},{"citation":"718-40-55-35","para":"55-35","html":"
This Example has the following assumptions:
  1. a
    On January 1, Year 1, Entity C established a nonleveraged employee stock ownership plan
  2. b
    Entity C contributed 10 percent of pretax profit before employee stock ownership plan related charges to the employee stock ownership plan at the end of each of Years 1 through 5; the employee stock ownership plan bought newly issued employer stock with the contribution.
  3. c
    The number of shares, earnings, tax, and other relevant assumptions are the same as those for Example 1, Case A (see paragraph 718-40-55-4).
","snippet":"This Example has the following assumptions:\n(a) On January 1, Year 1, Entity C established a nonleveraged employee stock ownership plan\n(b) Entity C contributed 10 percent of pretax profit before employee stock ownership…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3030400c66a2be677146919e2215ae296f9282786b67c99de5953d3c7dfb3b25","downloaded_from":"2026-09-10T01:05:47.367Z","last_downloaded_at":"2026-09-10T01:05:47.367Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480459","source_sha256":"b0de0e683b6708a7848e16292670d58b44ac8ea93c18f9831b8f82ae647393a7"}},{"citation":"718-40-55-36","para":"55-36","html":"
The following chart sets forth Entity C's employee stock ownership plan-related information.
","snippet":"The following chart sets forth Entity C's employee stock ownership plan-related information.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1034490185d4cbf3565cacf6622146c89f848080857b7dfeca4b63a57c39568f","downloaded_from":"2026-09-10T01:05:47.367Z","last_downloaded_at":"2026-09-10T01:05:47.367Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480459","source_sha256":"b0de0e683b6708a7848e16292670d58b44ac8ea93c18f9831b8f82ae647393a7"}},{"citation":"718-40-55-37","para":"55-37","html":"
The year-end market value is used in this Example to determine the number of employee stock ownership plan shares purchased. [Year 1: $180,000 divided by $11.50 (See the table in the preceding paragraph) equals 15,652]
","snippet":"The year-end market value is used in this Example to determine the number of employee stock ownership plan shares purchased. [Year 1: $180,000 divided by $11.50 (See the table in the preceding paragraph) equals 15,652]","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:dd6482c4a1b54c03f4c956214fa04c629dead6c48bdc1fa190119ff3f82af3a2","downloaded_from":"2026-09-10T01:05:47.367Z","last_downloaded_at":"2026-09-10T01:05:47.367Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480459","source_sha256":"b0de0e683b6708a7848e16292670d58b44ac8ea93c18f9831b8f82ae647393a7"}},{"citation":"718-40-55-38","para":"55-38","html":"
Entity C would record journal entries for Years 1 and 2 as follows.
","snippet":"Entity C would record journal entries for Years 1 and 2 as follows.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3bd205f1b94b14a331bb5dafcaad13e301838674dd9a93b2c3594f33ae2e6d9d","downloaded_from":"2026-09-10T01:05:47.367Z","last_downloaded_at":"2026-09-10T01:05:47.367Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480459","source_sha256":"b0de0e683b6708a7848e16292670d58b44ac8ea93c18f9831b8f82ae647393a7"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:19d676435a39ba7fdae5c875f8a9e5a4707d2b98a76be1811ebede328f4b2622","downloaded_from":"2026-09-10T01:05:47.367Z","last_downloaded_at":"2026-09-10T01:05:47.367Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480459","source_sha256":"b0de0e683b6708a7848e16292670d58b44ac8ea93c18f9831b8f82ae647393a7"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9468a7d23a3c2880646579107847bf3e221d7f879924fd27c3875587c623a78b","downloaded_from":"2026-09-10T01:05:47.367Z","last_downloaded_at":"2026-09-10T01:05:47.367Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480459","source_sha256":"b0de0e683b6708a7848e16292670d58b44ac8ea93c18f9831b8f82ae647393a7"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9468a7d23a3c2880646579107847bf3e221d7f879924fd27c3875587c623a78b","downloaded_from":"2026-09-10T01:05:47.367Z","last_downloaded_at":"2026-09-10T01:05:47.367Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480459","source_sha256":"b0de0e683b6708a7848e16292670d58b44ac8ea93c18f9831b8f82ae647393a7"}}