In our comment letter on the proposed ASU, Technical Corrections and Improvements Related to Glossary Terms, we support the board's efforts to clarify the Master Glossary of the Codification. Except for the two matters described below, we agree with the changes included in the proposed update and believe they meet the board’s objective to improve the Codification.
We do not agree with the proposal to replace the term “fair value” in ASC 718, Compensation-Stock Compensation, and in ASC 505, Equity, with the term “share-based payment value” without also modifying the related definition. The term “fair value,” as currently used in those topics, describes the measurement attribute for compensation cost of share-based awards, the specific measurement guidance for which is further described in ASC 718. Rather than rename the term “fair value” in ASC 718 and ASC 505, we recommend the board delete the term “fair value” from the Master Glossary that originates from the issuance of FASB Statement No. 123 (revised 2004), Share-Based Payment (FAS 123R).
Alternatively, the board could replace the term “fair value” in ASC 718 and ASC 505 with the term “share-based payment value,” include that new term in the Master Glossary, and modify the definition of share-based payment value to describe what this term is intended to represent for purposes of measuring the compensation cost of share-based awards.
In addition, we recommend the board provide transition guidance for the proposed changes to Master Glossary terms “plan assets” and “actual return on plan assets.”