We are in negotiations with a former executive on a settlement. As part of the discussions, there will be a cash settlement as well as issuance of shares that will be fully vested. We will accrue the cash settlement portion under ASC 450, loss contingencies. However, how do we handle the issuance of shares as part of the settlement?
Legal settlement
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You would also accrue the estimated fair value of shares at settlement, along with the cash settlement, for the full value of the settlement when it is probable and estimable. Then when the settlement is finalized and the shares are issued, you would debit the accrual and credit equity.