ASC 718 (Formerly SFAS 123R)
Share based payments to acquire assets, settle liabilities, and compensate employees continue to be a popular practice among companies. Accounting Standards Codification 718 (formerly SFAS 123R) provides guidance for reporting such transactions and capturing the overall economics.
What is ASC 718? ASC 718 requires that all equity awards granted to employees, consultants, and board members be accounted for at "fair value" and then expensed over the vesting term of the grant. This can become more difficult as additional grants are made and vesting and forfeitures add complexity to the calculations.
What is the impact of ASC 718? ASC 718 directly impacts your financial performance in addition to drawing audit scrutiny. Cabrillo can manage your compliance activities related to stock-based compensation charges and capitalization table management, allowing you to stay focused on managing your business.
How can Cabrillo help? Cabrillo provides a full range of services related to managing your stock option plan:
Fair Value Calculations: Cabrillo provides calculations of the fair value of common stock and common stock options, commonly known as 409a.
Accounting Inputs: Cabrillo provides the calculation of stock based compensation expense for each reporting period and the related journal entries and disclosures for financial reporting.
Capitalization Tables: Cabrillo can take over the administration of the Company's capitalization table, allowing you to stay ahead of reporting requirements and inbound requests for updated capitalization information.
Our Approach: The valuation process for ASC 718 is similar to that used in 409A analysis. Cabrillo Advisor's team of valuation experts has significant experience in valuing equity securities for a number of companies in a myriad of different industries. We identify the value drivers of the business and provide accurate valuations of the equity instruments involved in the transaction. Our final work product is clear and concise and presents a highly defensible conclusion that accelerates audit review and minimizes management distraction.