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7220 Compensation Arrangements
us SEC - Financial Reporting Manual
7220.1 Contributed services
(Last updated: 3/31/2009)
a. Financial statements might not include compensation at fair market levels where charges were not made or were relatively low, or if amounts owed for services were forgiven and accounted for as a contribution to capital. If so, the notes to the historical financial statements should provide quantified disclosure of the significant compensation arrangements with related parties that resulted in below-market compensation expense.
b. If historical statements reflect compensation that will be materially different from the compensation expense expected after the offering or in the future, disclosure of the salary commitment should be made and pro forma data for the latest year and interim period may be necessary. In addition, consider whether additional disclosure is warranted in the MD&A discussion of liquidity.
7220.2 Other forms of compensation provided by a related party or other holder of an economic interest in the entity to an employee for services should also be reflected in the registrant's financial statements.
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