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Our answer to the challenge of valuing embedded derivatives
Our valuation report provides you with everything you need to record your derivatives:
We provide you with a clear explanation of our methodology and assumptions so that your auditors get a complete set of all reports and documentation.
ASC 815, formerly known as FAS 133, Accounting for Derivative Instruments and Hedging Activities, provides comprehensive guidance on derivative and hedging transactions. It sets forth the definition of a derivative instrument and specifies how to account for such instruments, including derivatives embedded in hybrid instruments. An embedded derivative is a contract that contains implicit or explicit terms that affect some or all of the cash flows or the value of other exchanges required by a contract in a manner similar to a derivative instrument. A derivative instrument often arises from a convertible note payable with a variable conversion price. These instruments are required to be valued at fair market value. Historically, there are two methods in use for valuing a derivative, Black-Scholes-Merton (BSM) and the lattice models.
The valuation process can be complex. Our staff at Clear Financial Solutions, Inc. has been preparing these valuations and valuing options for combined total of over twenty-five years. We have developed an automated tool that simplifies the valuation process and allows a valuation to be performed timely and accurately and for a flat fee. Our output meets financial statement disclosure requirements and includes all the information that a company needs to properly record derivatives activity and provide substantiation for the company’s auditors.
Our app will remember your existing instruments, so you only need to enter new notes and transactions. You don’t even need to delete paid-off notes – enter the transactions that take the principal balance to zero, and the system does the rest.
Since we run in the Cloud, we can accommodate an almost unlimited number of users and transactions. Our system scales based upon demand and can support a large number of users and transactions.
CPR-Serviced: Upload (coming soon) copies of the documents that gave rise to the deriviatives and source documents for any transactions that occurred during the period - such as note agreements, warrants, options, or conversion notices, exercise notices and we send you a complete valuation report for a fixed fee of $3,000*, within 3 business days.
There are no additional costs for volume of transactions. Our app doesn’t care how many there are!
*Our prices are based upon receiving a complete data set from you BEFORE we run the program. If you discover that you did not send us a complete data set and that we must rerun the report, we charge $500 each time an additional run is required.