ASC 718 grant-date fair value.
Documented to survive review.
Options, RSUs, and market-condition awards valued with the right model — Black-Scholes, lattice, or Monte Carlo — with every input sourced, every judgment documented, and expense schedules your auditor can tie out.
Every award is an expense. Every input is a question.
ASC 718 requires share-based awards to be measured at grant-date fair value and expensed over the service period. For plain time-vested options that's a Black-Scholes exercise. For awards with share-price hurdles, relative TSR, or path-dependent features, it means simulation — and a model-selection decision you'll be asked to defend.
Auditors rarely challenge the arithmetic. They challenge the inputs: the volatility peer group, the expected term basis, the underlying stock value's consistency with your 409A, and whether assumptions drift between grants without documented reasons.
FairValueX documents each input to source — so the review closes fast.
You Need ASC 718 Support When:
Two standards. One equity story. Don't let them diverge.
A 409A valuation sets the fair market value of your common stock for tax purposes — it protects option holders under IRC §409A safe harbor. ASC 718 measures the expense of the award for financial reporting. Different rules, different audiences — but the 409A-supported stock value typically feeds the ASC 718 model, so inconsistencies between the two are one of the first things auditors flag.
FairValueX runs both under one documentation standard: the same underlying stock value, the same input provenance, one consistent evidence trail across your tax and financial-reporting valuations.
The model follows the award's features.
Model selection is a documented decision — matched to vesting structure, conditions, and exercise behavior, not defaulted.
Black-Scholes-Merton
Time-vested options with standard features. Inputs sourced: stock value, volatility, expected term, risk-free rate, dividend yield.
Lattice / Binomial
Awards with exercise behavior that varies by node — early exercise patterns, post-vest restrictions, or term-dependent features.
Monte Carlo Simulation
Market conditions: share-price hurdles, relative TSR, and path-dependent payoffs that closed-form models cannot represent.
Volatility Peer Analysis
Peer set selected for industry, size, and stage; measurement period matched to expected term; selection memo included.
Expected Term Support
Company exercise history where sufficient; SAB Topic 14 simplified method where its conditions are met — basis documented either way.
Modifications & Repricings
Incremental fair value measured at modification date, with before/after models and the expense impact schedule.
Common ASC 718 questions.
409A is tax compliance: an appraisal of common stock FMV that protects option strike prices under IRC §409A. ASC 718 is financial reporting: measuring the award's grant-date fair value and expensing it. The 409A stock value usually feeds the ASC 718 model — so auditors check them against each other. We keep both on one evidence trail.
When the award has a market condition (price hurdle, relative TSR) or path-dependent features. Those need Monte Carlo simulation or a lattice model. Using Black-Scholes anyway is a classic audit finding — see BSM vs. lattice vs. Monte Carlo.
From a documented peer group of comparable public companies, measured over a period consistent with the expected term. The peer set — and any changes to it between grant dates — must be supported in writing. That memo ships inside our deliverable.
Your own exercise history if it's statistically sufficient; otherwise the SAB Topic 14 simplified method (midpoint of average vesting and contractual term) where its conditions are met. Either way, the basis is documented so the choice survives review.
Yes. Performance (non-market) conditions affect whether expense is recognized — assessed by probability each period. Market conditions are built into the grant-date fair value itself — expense is recognized regardless of whether the hurdle is met, provided service is rendered. Structuring this correctly up front avoids restatements.
ASC 718 references from the library.
ASC 718 for Private Companies
The full standard, translated for private-company CFOs.
The ASC 718 Inputs Guide
Volatility, expected term, risk-free rate — sourcing and supporting each input.
BSM vs. Lattice vs. Monte Carlo
Model selection by award feature — with the documentation to defend it.
409A Valuation Services
The tax-side companion — one consistent stock value across both standards.
The Complete Guide to 409A Valuations
Safe harbor, triggers, methodology, and audit — the CFO playbook.
Professional Judgment Documentation
Making assumption choices visible, bounded, and defensible.
Grant season or audit season — be ready for both.
Share your award types and grant calendar. We'll confirm the right models, the inputs needed, and a fixed fee — before work begins.
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