Options Tool
Since the publication of IFRS 2 in February 2004 German companies which prepare their accounts according to international accounting regulations have had to account share option programmes as expenditure.
In accordance with IFRS 2 the valuation of share options is to be done on the basis of a recognised valuation model for options. This is normally an accepted binomial model. The complexity of the options price model and the different parameters which influence it 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, duration of the options and the volatility of the share price.
The presentation of these parameters in a binomial model requires a complex valuation tool which must be set up differently dependent of the individual options conditions at the respective company.
FAS AG uses a valuation model according to the valuation purpose and
the design of the relevant stock option programme. Using this model the
parameters for as many tranches issued as desired can be presented. In
addition to the determination of the relevant Input parameters, as for
example the calculation of the volatility or the determination of the
risk free rate according to the relevant maturity, FAS AG performs the
calculation of the price per option for every tranche.
As result you receive from FAS AG a customized Tool with the following information:
- Overview of the option price determination and the relevant parameters
- Determination of the relevant journal entries to assign the expenses from the stock option programme to the affected accounting periods taking into consideration the fluctuation of employees.
- Preparation of the journal entries until the expected exercise of the option.
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You can request further information about the Options Tool using our contact form.
