# ASC 718-740-35: Compensation—Stock Compensation — Income Taxes — 35 Subsequent Measurement Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/718/740/#35-subsequent-measurement) 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. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-10T01:06:37.865Z to 2026-09-10T01:06:37.865Z Record version: sha256:0cb333ef4afc280726d4b78864ed176b1c6ee7a6bd12e99dd5f9a007b1fa71d8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 718-740-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/718/740/#35-subsequent-measurement) SEC content: no ##### [718-740-35-1](https://asc.understandingaccounting.org/asc/718/740/#718-740-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:06:37.865Z to 2026-09-10T01:06:37.865Z Record version: sha256:75069941189eeb12c472a930a5a983f8b1085e206cbc9566d431d315dfc26b74 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Section 718-740-30 addresses initial measurement issues related to share-based payment [temporary differences](https://asc.understandingaccounting.org/glossary/t/#temporary-difference "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."). 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. #### Treatment of Tax Consequences When Actual Deductions Differ from Recognized Compensation Cost ##### [718-740-35-2](https://asc.understandingaccounting.org/asc/718/740/#718-740-35-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:06:37.865Z to 2026-09-10T01:06:37.865Z Record version: sha256:421ee5ce8ccaf32f00503d9f127d4f99f309d2f685865f87b988a57ae59aee2c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/glossary/s/#share-based-payment-arrangements "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.") differs in amounts and timing from the compensation cost recorded in the financial statements. The tax effect of the difference, if any, between the cumulative compensation cost of an [award](https://asc.understandingaccounting.org/glossary/a/#award "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.") 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 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. The appropriate period depends on the type of award and the incremental guidance under the requirements of Subtopic 740-270 on income taxes—interim reporting. ##### [718-740-35-3](https://asc.understandingaccounting.org/asc/718/740/#718-740-35-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:06:37.865Z to 2026-09-10T01:06:37.865Z Record version: sha256:8e508c310a03a1078c71b522f7662d20c4e44b17c1bfe3fdc5386a06d58c0051 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2016-09](https://asc.understandingaccounting.org/updates/asu-2016-09/). ##### [718-740-35-4](https://asc.understandingaccounting.org/asc/718/740/#718-740-35-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:06:37.865Z to 2026-09-10T01:06:37.865Z Record version: sha256:746417e559b0b643a175765d9f77f3986014612f173b52712ea12aac02d82e05 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Examples 1, Case A (paragraph [718-20-55-10](https://asc.understandingaccounting.org/asc/718/20/#718-20-55-10)); 8 (paragraph [718-20-55-71](https://asc.understandingaccounting.org/asc/718/20/#718-20-55-71)); 15, Case A (paragraph [718-20-55-123](https://asc.understandingaccounting.org/asc/718/20/#718-20-55-123)); and Example 1 (paragraph [718-30-55-1](https://asc.understandingaccounting.org/asc/718/30/#718-30-55-1)), which provide illustrations of accounting for the income tax effects of various awards. ##### [718-740-35-5](https://asc.understandingaccounting.org/asc/718/740/#718-740-35-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:06:37.865Z to 2026-09-10T01:06:37.865Z Record version: sha256:781f25b2b6edd8508d4a40f7bf36d6df3bc6de37ac538da6d3d1e23a9db270f2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2016-09](https://asc.understandingaccounting.org/updates/asu-2016-09/). ##### [718-740-35-6](https://asc.understandingaccounting.org/asc/718/740/#718-740-35-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:06:37.865Z to 2026-09-10T01:06:37.865Z Record version: sha256:e497653028977bb11eac2955987340879ec5fd6eccb160c177e107834d274f78 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2016-09](https://asc.understandingaccounting.org/updates/asu-2016-09/). ##### [718-740-35-7](https://asc.understandingaccounting.org/asc/718/740/#718-740-35-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:06:37.865Z to 2026-09-10T01:06:37.865Z Record version: sha256:c8f6a02e4f02209adf40e69d73df21a6cdda927c8c99abaa50ad32c1b34fd702 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2016-09](https://asc.understandingaccounting.org/updates/asu-2016-09/). ##### [718-740-35-8](https://asc.understandingaccounting.org/asc/718/740/#718-740-35-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:06:37.865Z to 2026-09-10T01:06:37.865Z Record version: sha256:9c9eda14b78767f7eeeab68aa41b927cb61937b219ec88241fc7d4c93c7e92a3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2016-09](https://asc.understandingaccounting.org/updates/asu-2016-09/). ##### [718-740-35-9](https://asc.understandingaccounting.org/asc/718/740/#718-740-35-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:06:37.865Z to 2026-09-10T01:06:37.865Z Record version: sha256:7075149d8a0ffa7f58230b3c679ddc00b532e6bc81312460f7afad9fc4d9a302 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2016-09](https://asc.understandingaccounting.org/updates/asu-2016-09/).