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This chapter provides an overview of employee stock ownership plans (ESOPs) as well as questions and interpretive responses to specific aspects of presentation and recognition. The guidance for ESOPs is located in ASC 718-40. This chapter includes some supplemental and interpretative guidance, but does not include the entirety of the accounting framework contained in ASC 718-40.
AICPA Statement of Position (SOP) No. 76-3, Accounting Practices for Certain Employee Stock Ownership Plans, was the principal source of guidance before the issuance of SOP 93-6, Employers' Accounting for Employee Stock Ownership Plans," which is now codified in ASC 718-40. The guidance of SOP 76-3 was not carried forward to the FASB Accounting Standards Codification, but under the original transition provisions of SOP 93-6, employers could elect to continue to account for shares acquired by an ESOP on or before December 31, 1992 under SOP 76-3. We have not included detailed guidance under SOP 76-3 in this guide, but information can be found in SOP 76-3. The following EITF consensuses also provide further interpretive guidance on the application of SOP 76-3:

The key difference between the guidance in ASC 718-40 and SOP 76-3 is that compensation cost recognized under SOP 76-3 is based on the historical purchase cost of the shares rather than the fair value of the shares at the time they are allocated to employees.
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