Exposure Document

Share-Based Payment—an amendment of Statements No. 123 and 95 (Proposed Statement of Financial Accounting Standards)

On March 31, 2004, the Financial Accounting Standards Board (FASB) issued a proposed Statement, Share-Based Payment, that addresses the accounting for share-based payment transactions in which an enterprise receives employee services in exchange for (a) equity instruments of the enterprise or (b) liabilities that are based on the fair value of the enterprise’s equity instruments or that may be settled by the issuance of such equity instruments. The proposed Statement would eliminate the ability to account for share-based compensation transactions using APB Opinion No. 25, Accounting for Stock Issued to Employees, and generally would require instead that such transactions be accounted for using a fair-value-based method.

The Board invites comments on all matters in the proposed Statement, particularly on the specific issues discussed in the Notice for Recipients section. Respondents need not comment on all of the issues presented and are encouraged to comment on additional issues as well.

The Board plans to hold several public roundtable meetings with constituents to discuss issues related to the proposed Statement. Those roundtable meetings are tentatively scheduled to take place at the end of June 2004 (the end of the comment period) in the San Francisco Bay area of California, and in Norwalk, Connecticut. The specific dates of the public roundtables and instructions for constituents interested in participating will be announced in a future issue of FASB Action Alert. The Board also plans to discuss issues related to the proposed Statement concerning small and medium-sized businesses at the inaugural meeting of the Small Business Advisory Committee on May 11, 2004, in Norwalk, Connecticut.

The proposed Statement has been divided into the following eight separate files to manage the time required to download the files and to allow constituents to retrieve specific portions of the proposed Statement.

1. This file contains the main body of the proposed Statement, which includes the Notice for Recipients, a summary of the proposed Statement’s provisions, the amendments of FASB Statements No. 123, Accounting for Stock-Based Compensation, and No. 95, Statement of Cash Flows, and the provisions relating to the proposed Statement’s effective dates and transition.

   [Proposed Statement]

2. Appendix A contains a copy of paragraphs 1–50 of Statement 123 marked to show changes that would be made by the proposed Statement.

   [Appendix A]

3. Appendix B contains implementation guidance, which illustrates the application of the proposed Statement; this guidance is an integral part of the proposed Statement.

   [Appendix B]

4. Appendix C contains background information on the proposed Statement and the basis for the Board’s conclusions.

   [Appendix C]

5. Appendix D presents consequential amendments to existing FASB pronouncements as a result of the proposed Statement.

   [Appendix D]

6. Appendix E is a glossary of the terms used in the proposed Statement.

   [Appendix E]

7. Appendix F contains a clean copy of paragraphs 1–50 of Statement 123 as amended by the proposed Statement.

   [Appendix F]

8. Appendix G describes the impact of the proposed Statement on Emerging Issues Task Force issues and on Statement 133 implementation issues.

   [Appendix G]

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