The US GAAP guidance for share-based payments, ASC 718, Compensation — Stock Compensation, and ASC 505-50, Equity — Equity-Based Payments to Non-Employees, is largely converged with the guidance in IFRS 2, Share-Based Payment.
Both require a fair value-based approach in accounting for share-based payment arrangements whereby an entity (1) acquires goods or services in exchange for issuing share options or other equity instruments (collectively referred to as "shares" in this guide) or (2) incurs liabilities that are based, at least in part, on the price of its shares or that may require settlement in its shares.
Under both US GAAP and IFRS, this guidance applies to transactions with both employees and nonemployees and is applicable to all companies. Both ASC 718 and IFRS 2 define the fair value of the transaction to be the amount at which the asset or liability could be bought or sold in a current transaction between willing parties.
Further, they require the fair value of the shares to be measured based on a market price (if available) or estimated using an option-pricing model. In the rare cases in which fair value cannot be determined, both sets of standards allow the use of intrinsic value, which is remeasured until the settlement.
In addition, the treatment of modifications and settlements of share-based payments is similar in many respects.
Finally, both require similar disclosures in the financial statements to provide investors with sufficient information to understand the types and extent to which the entity is entering into share-based payment transactions.
No further convergence is planned at this time.
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