Accounting
ASC 718
Quick definition
GAAP rules for expensing stock-based compensation.
ASC 718 governs how companies recognize compensation expense for equity awards (options, RSUs). Expense equals grant-date fair value spread over the service (vesting) period, with adjustments for forfeitures. Drives a significant non-cash expense on most startup P&Ls.
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Insights, guides, and tools where ASC 718 shows up.
Frequently asked questions
- What is ASC 718?
- ASC 718 governs how companies recognize compensation expense for equity awards (options, RSUs). Expense equals grant-date fair value spread over the service (vesting) period, with adjustments for forfeitures. Drives a significant non-cash expense on most startup P&Ls.
- Why is ASC 718 important for startups?
- ASC 718 is a accounting concept that matters for startup founders because it shows up in fundraising readiness, financial decision-making, and operational discipline at the stage where mistakes are expensive to undo. Founders who understand it are better prepared for diligence, board meetings, and investor conversations.
- What category does ASC 718 belong to?
- ASC 718 is a Accounting term in the StartupCFO finance glossary, alongside other accounting concepts that founders, CFOs, and accountants use in startup operations and reporting.
- Where can I learn more about ASC 718?
- Beyond this definition, see the related accounting terms below, or explore StartupCFO's insights and tools that put ASC 718 in context. For specific situations, talk to a fractional CFO who can walk through your numbers.
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