BC45 Some have questioned whether recognition of an expense arising from particular share‑based payment transactions is consistent with accounting standard‑setters’ conceptual frameworks, in particular, the Framework, which states:

Expenses are decreases in economic benefits during the accounting period in the form of outflows or depletions of assets or incurrences of liabilities that result in decreases in equity, other than those relating to distributions to equity participants. (paragraph 70, emphasis added)

BC46 Some argue that if services are received in a share‑based payment transaction, there is no transaction or event that meets the definition of an expense. They contend that there is no outflow of assets and that no liability is incurred. Furthermore, because services usually do not meet the criteria for recognition as an asset, it is argued that the consumption of those services does not represent a depletion of assets.

BC47 The Framework defines an asset and explains that the term ‘asset’ is not limited to resources that can be recognised as assets in the balance sheet (Framework, paragraphs 49 and 50). Although services to be received in the future might not meet the definition of an asset, [For example, the entity might not have control over future services.] services are assets when received. These assets are usually consumed immediately. This is explained in FASB Statement of Financial Accounting Concepts No. 6 Elements of Financial Statements: