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Our publication discusses the FASB’s proposal to add an example to ASC 718 that would illustrate how an entity would apply the scope guidance to determine whether a profits interest award should be accounted for as a share-based payment arrangement. The proposal is intended to reduce the complexity of accounting for profits interest awards and similar awards and reduce diversity in practice. The proposal would apply to all reporting entities that grant profits interest awards or similar awards. Comments are due by 10 July 2023.