The FASB has issued a formal proposal to clarify existing guidance on generally accepted accounting principles (GAAP) related to profits interest, a form of compensation also known as carried interest.
The new guidelines in the exposure draft now out for public comment aim to help report preparers determine whether to treat profits interest-type awards as a “share-based arrangement within the scope of Topic 718, Compensation-Stock Compensation.”
The current guidance in place varies among preparers, with some treating it as a share-based payment arrangement and others treating it as a cash bonus or profit-sharing arrangement.
Comments on the formal proposal are due by Monday, July 10. Learn more.