The Task Force agreed to revise the abstract of EITF Issue No. 96-18, Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services. An enterprise agrees to issue stock options in exchange for the services of a lawyer to defend it in a product liability case. The quantity, exercise price, and exercise period of the stock options are dependent on whether the lawyer wins or loses the case. If the lawyer quits the case, the lawyer is subject to damages. This arrangement contains a performance commitment regardless of the fact that both the quantity and some of the terms of the stock options are unknown when the arrangement is established.
Earlier adoption is encouraged.
The SEC Observer noted that the SEC staff would expect registrants to continue to make disclosures previously required under Issue 00-14 until that consensus is adopted.