In this morning’s Board meeting, the Financial Accounting Standards Board moved to finalize FSP FAS-123r-d, a proposed FASB Staff Position regarding the proper accounting classification under SFAS 123R for a share-based payment arrangement that allows a cash settlement upon change in control. [FASB Board Meeting Handout, 2/1/06, pp 6-7] Background: See BeneBlog 1/15/06.
- FASB decided against restricting the guidance in the FSP only to specific contingent events. Discussion made it clear that the Board expects a “continuing probability assessment” for each relevant event.
- The Board decided to retain the proposed probability approach, versus a grandfathering approach suggested by a comment made on the proposed rule.
- The Board agreed that non-employee awards should not be included within the scope of this FSP, but seemed puzzled as to why the plain language of the proposed FSP had not already made that distinction sufficiently clear.
The final FSP should be published shortly.
Final version of FSP FAS 123(R)-4 was posted on the FASB website 2/3/06. If a company adopted SFAS 123(R) prior to issuance of the FSP, then the FSP is to be applied in the first reporting period beginning after 2/3/06. Otherwise, the guidance applies upon initial adoption of SFAS 123(R).
Comment by Fuguerre — February 7, 2006 @ 2:08 pm