{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/718/740/#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":"718-740","subtopic_title":"Income Taxes","section":{"number":"35","label":"35 Subsequent Measurement","anchor":"35-subsequent-measurement","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"718-740-35-1","para":"35-1","html":"<div class=\"asc-body\"><div class=\"norm-text\">Section <a altsource=\"GUID-E776AD4E-5C2F-4AFF-9F08-E2BBE159DC12.ditamap\" class=\"ditamap\">718-740-30</a> addresses initial measurement issues related to share-based payment <a href=\"/glossary/t/#temporary-difference\" class=\"term\" title=\"A difference between the tax basis of an asset or liability computed pursuant to the requirements in Subtopic 740-10 for tax positions, and its reported amount in the financial statements that will result in taxable or deductible amounts in future years when the reported amount of the asset or liability is recovered or settled, respectively. Paragraph 740-10-25-20 cites examples of temporary differences. Some temporary differences cannot be identified with a particular asset or liability for financial reporting (see paragraphs 740-10-05-10 and 740-10-25-24740-10-25-25), but those temporary differences do meet both of the following conditions: Result from events that have been recognized in the financial statements Will result in taxable or deductible amounts in future years based on provisions of the tax law. Some events recognized in financial statements do not have tax consequences. Certain revenues are exempt from taxation and certain expenses are not deductible. Events that do not have tax consequences do not give rise to temporary differences.\"><span>temporary differences</span></a>. The requirements of that Section also apply to subsequent measurements of share-based payment temporary differences. The guidance in this Section is incremental to the guidance for initial measurement.</div></div>","snippet":"Section 718-740-30 addresses initial measurement issues related to share-based payment temporary differences. The requirements of that Section also apply to subsequent measurements of share-based payment temporary differ…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:75069941189eeb12c472a930a5a983f8b1085e206cbc9566d431d315dfc26b74","downloaded_from":"2026-09-10T01:06:37.865Z","last_downloaded_at":"2026-09-10T01:06:37.865Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479176","source_sha256":"31274a401c8b5e35b798e85879c8b8e0c3cf806db263cb9ab02d43275e830a0a"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0f8ac7ec551ece8dbe20e7d354de5a7c83cb41ab0806dccfedd0bfa8ee14e173","downloaded_from":"2026-09-10T01:06:37.865Z","last_downloaded_at":"2026-09-10T01:06:37.865Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479176","source_sha256":"31274a401c8b5e35b798e85879c8b8e0c3cf806db263cb9ab02d43275e830a0a"}},{"block":null,"heading":"Treatment of Tax Consequences When Actual Deductions Differ from Recognized Compensation Cost","paragraphs":[{"citation":"718-740-35-2","para":"35-2","html":"<div class=\"asc-body\"><div class=\"norm-text\">This Section addresses the accounting required in a period when <span class=\"sfragment\" id=\"sfr_D07CC93A-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">the deduction for compensation expense to be recognized in a tax return for <a href=\"/glossary/s/#share-based-payment-arrangements\" class=\"term\" title=\"An arrangement under which either of the following conditions is met: One or more suppliers of goods or services (including employees) receive awards of equity shares, equity share options, or other equity instruments. The entity incurs liabilities to suppliers that meet either of the following conditions: The amounts are based, at least in part, on the price of the entity's shares or other equity instruments. (The phrase at least in part is used because an award may be indexed to both the price of the entity's shares and something other than either the price of the entity's shares or a market, performance, or service condition.) The awards require or may require settlement by issuance of the entity's shares. The term shares includes various forms of ownership interest that may not take the legal form of securities (for example, partnership interests), as well as other interests, including those that are liabilities in substance but not in form. Equity shares refers only to shares that are accounted for as equity. Also called share-based compensation arrangements.\"><span>share-based payment arrangements</span></a> differs in amounts and timing from the compensation cost recorded in the financial statements. </span></span><span class=\"sfragment\" id=\"sfr_D07CCAB0-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The tax effect of the difference, if any, between the cumulative compensation cost 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> recognized for financial reporting purposes and the deduction for an award for tax purposes shall be recognized as income tax expense or benefit in the income statement. The tax effect shall be recognized </span></span><span class=\"sfragment\" id=\"sfr_D07CCBD7-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">in the income statement in the period in which the amount of the deduction is determined, which typically is when an award is exercised or expires, in the case of share options, or vests, in the case of nonvested stock awards. </span></span><span class=\"sfragment\" id=\"sfr_D07CCCD8-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The appropriate period depends on the type of award and the incremental guidance under the requirements of Subtopic <a altsource=\"GUID-43DEDE3E-5573-4D5E-B9C5-203F50743720.ditamap\" class=\"ditamap\">740-270</a> on income taxes—interim reporting. </span></span></div></div>","snippet":"This Section addresses the accounting required in a period when the deduction for compensation expense to be recognized in a tax return for share-based payment arrangements differs in amounts and timing from the compensa…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:421ee5ce8ccaf32f00503d9f127d4f99f309d2f685865f87b988a57ae59aee2c","downloaded_from":"2026-09-10T01:06:37.865Z","last_downloaded_at":"2026-09-10T01:06:37.865Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479176","source_sha256":"31274a401c8b5e35b798e85879c8b8e0c3cf806db263cb9ab02d43275e830a0a"}},{"citation":"718-740-35-3","para":"35-3","html":"<div class=\"asc-body\"><div class=\"norm-text\"><a href=\"/updates/asu-2016-09/\" class=\"xref\">Paragraph superseded by Accounting Standards Update No. 2016-09</a>.</div></div>","snippet":"Paragraph superseded by Accounting Standards Update No. 2016-09.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8e508c310a03a1078c71b522f7662d20c4e44b17c1bfe3fdc5386a06d58c0051","downloaded_from":"2026-09-10T01:06:37.865Z","last_downloaded_at":"2026-09-10T01:06:37.865Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479176","source_sha256":"31274a401c8b5e35b798e85879c8b8e0c3cf806db263cb9ab02d43275e830a0a"}},{"citation":"718-740-35-4","para":"35-4","html":"<div class=\"asc-body\"><div class=\"norm-text\">See Examples 1, Case A (paragraph <a href=\"/asc/718/20/#718-20-55-10\" class=\"xref\">718-20-55-10</a>); 8 (paragraph <a href=\"/asc/718/20/#718-20-55-71\" class=\"xref\">718-20-55-71</a>); 15, Case A (paragraph <a href=\"/asc/718/20/#718-20-55-123\" class=\"xref\">718-20-55-123</a>); and Example 1 (paragraph <a href=\"/asc/718/30/#718-30-55-1\" class=\"xref\">718-30-55-1</a>), which provide illustrations of accounting for the income tax effects of various awards.</div></div>","snippet":"See Examples 1, Case A (paragraph 718-20-55-10); 8 (paragraph 718-20-55-71); 15, Case A (paragraph 718-20-55-123); and Example 1 (paragraph 718-30-55-1), which provide illustrations of accounting for the income tax effec…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:746417e559b0b643a175765d9f77f3986014612f173b52712ea12aac02d82e05","downloaded_from":"2026-09-10T01:06:37.865Z","last_downloaded_at":"2026-09-10T01:06:37.865Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479176","source_sha256":"31274a401c8b5e35b798e85879c8b8e0c3cf806db263cb9ab02d43275e830a0a"}},{"citation":"718-740-35-5","para":"35-5","html":"<div class=\"asc-body\"><div class=\"norm-text\"><a href=\"/updates/asu-2016-09/\" class=\"xref\">Paragraph superseded by Accounting Standards Update No. 2016-09</a>.</div></div>","snippet":"Paragraph superseded by Accounting Standards Update No. 2016-09.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:781f25b2b6edd8508d4a40f7bf36d6df3bc6de37ac538da6d3d1e23a9db270f2","downloaded_from":"2026-09-10T01:06:37.865Z","last_downloaded_at":"2026-09-10T01:06:37.865Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval 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