51. Valuation of Employee Stock Options, Market Condition, and Performance Based Options

Fair Value Measurements
Field of Study: 
CPE Credit: 
Knowledge Level: 
Basic knowledge of, or general experience in, forensic accounting, business valuation, or litigation

Wednesday, November 7, 2018

Introduction to valuation of employee stock compensation awards. Service, market, and performance conditions and their impact the fair value. Deeply out-of-the-money options. Size and leverage impact on the volatility. Introduction to Black-Scholes, binomial model, and Monte Carlo simulations.
Learning Outcomes:
List and explain the different types of options Identify the methodologies used to value options.
Define the concept of "moneyness" and how it impacts the selection of the valuation methodology Identify significant assumptions used in the valuation of options
Recognize the ASC 718 and SAB 14 requirements for estimating the expected volatility for public companies
Recognize the AICPA recommendations for estimating the expected volatility for privately-held companies