FASB: share-based payment to be recognized in financial statements

Healthcare Financial Management, Feb, 2005

FASB has published Statement No. 123 (revised 2004), Share Based Payment, requiring that the compensation cost relating to share-based payment transactions be recognized in financial statements. Compensation cost, the statement says, will be measured based on the fair value of the equity or liability instruments issued. The statement covers a wide range of share based compensation arrangements, including share options, restricted share plans, performance based awards, share appreciation rights, and employee share purchase plans.

Public entities (other than those filing as small business issuers) will be required to apply Statement 123R as of the first interim or annual reporting period that begins after June 15, 2005. Public entities that file as small business issuers will be required to apply Statement 123R in the first interim or annual reporting period that begins after Dee. 15, 2005. Nonpublic entities will have until the beginning of the first annual reporting period alter Dec. 15, 2005, to apply the statement.

To read the full text of the statement on share-based payment, go to www.fasb.org/ st/index.shtml.