The Financial Accounting Standards Board (FASB) has published a proposed accounting standards update (ASU), Revenue from Contracts with Customers (Topic 606). The ASU would improve the accounting guidance for share-based consideration payable to a customer in conjunction with selling goods or services. The ASU has been published for public review and comment.
The proposed ASU is intended to:
- improve financial reporting results by requiring revenue estimates to more accurately represent an entity’s expectations
- enhance comparability and alignment with the requirements for share-based consideration payable to a customer with the principles in the proposed ASU
- affect the timing of revenue recognition for entities that offer to pay share-based consideration (for example, equity instruments) to a customer (or to other parties that purchase the entity’s goods or services from the customer) to incentivize the customer (or its customers) to purchase its goods and services
- further define the requirements for share-based consideration payable to a customer that vests upon the customer purchasing a specified volume or monetary amount of goods and services from the entity
The proposed ASU and other FASB resources are available at www.fasb.org. Stakeholders are encouraged to review the proposed ASU and submit comments via email to director@fasb.org by November 14, 2024.
Sources:
FASB Seeks Public Comment on Proposed Clarifications to Share-Based Consideration Payable to a Customer(fasb.org)
Proposed Accounting Standards Update (fasb.org)
