Options Tool
Since the publication of IFRS 2 in February 2004, German companies that prepare their accounts in accordance with international accounting standards have had to account for stock option programmes as expenditure.
Under IFRS 2, stock options must be valued using a recognised valuation model for options. This is normally an accepted binomial model. The complexity of option pricing models and the different input parameters frequently leads to application difficulties in practice and requires considerable amounts of time. In this connection, IFRS requires different model parameters to be taken into account such as the exercise price, term of the option and volatility of the share price.
The presentation of these parameters, for example in a binomial model, requires a complex valuation tool which must be customised according to the individual option conditions at the respective company.
FAS AG selects a valuation model to suit the valuation purpose and design of the relevant stock option programme. The parameters for this model can map any number of issued tranches. In addition to determining the relevant input parameters, e.g., calculating volatility or determining the term-specific risk-free interest rate, FAS AG calculates the option price for each tranche for you in this tool.
As result you, receive from FAS AG a customised tool with the following information:
- Overview of the valuation results and the relevant parameters
- Allocation of the expenses from the stock option programme to the affected accounting periods, taking into consideration employee turnover.
- Presentation of the journal entries required up to the exercising of the option.
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You can request further information about the Options Tool using our contact form.
