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3.9 Recognition of payroll taxes (business combinations)
Publication date: 31 Aug 2022
us Business combinations guide
Payroll taxes on employee share-based payment awards are not recognized until the date of the event triggering the measurement and payment of the tax to the taxing authority in accordance with ASC 718-10-25-22. For a nonqualified option in the United States, this date is usually the exercise date. For restricted shares, this date is usually the vesting date. Therefore, practice has been not to record a liability for these charges at the acquisition date, nor adjust the consideration transferred for the acquiree. There is no liability to the company until the award is exercised; therefore, the liability will generally be recognized in the postcombination financial statements when the award is exercised (or vested for restricted shares).
PwC. All rights reserved. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.
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