The guidance in ASC 718, Compensation—Stock Compensation, applies to various types of equity-based awards that companies use to compensate their employees (see SC 1.5 regarding terminology used in this guide). Under ASC 718, companies recognize the fair value of those awards in their financial statements, generally beginning on the date the awards are granted. This guide covers the significant accounting aspects of ASC 718, with an emphasis on awards granted by public companies to their employees. Additional considerations for employee awards granted by nonpublic companies are discussed in SC 6. The accounting for awards granted to nonemployees is addressed in SC 7.
This guide does not address the income tax, earnings per share, or cash flow implications of stock-based compensation awards nor other presentation and disclosure matters. Refer to the following PwC guide sections for guidance on those matters:
  • TX 17 for guidance on income tax accounting consequences
  • FSP for earnings per share implications
  • FSP 6.8.18 for cash flow statement considerations
  • FSP 15 for guidance on the presentation and disclosure of stock-based compensation
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