We have some agreements where a cash bonus will be paid out upon a qualifying financing or change in control. Wouldn’t we just accrue it when it’s probable that the financing or change in control will happen?
Transaction Bonus
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Normally for an award with a performance condition, you would accrue when it’s probable. However, certain events like financing, change in control or IPO are not recognized until the transaction is consummated. This is because there are too many factors outside of the Company’s control. ASC 718 gives some guidance around this for equity-related awards, but it can also be applied to cash awards.