FINANCIAL INSTRUMENTS

 

In recent years, the use of financial instruments have become more widespread, and so has the diversity of such instruments. Therefore, the need for advanced valuation solutions has intensified.


We help establish appropriate techniques and methodologies into the valuation process, considering the complex features of each distinct financial instrument. Our valuation solutions are fully supported by a detailed narrative report suitable for review by independent auditors, the Securities and Exchange Commission, and the Internal Revenue Service.

 
 

Stocks and Derivatives

We have experience in valuing a variety of stock options and derivatives such as:
  • Swap contracts
  • Forward contracts
  • Warrants and options
  • Convertible notes and bonds
 
 
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Accounting Regulations IFRS 9 and ASC 825

Based on the new accounting regulations, IFRS 9 and ASC 825, the exception that requires equity instruments and related derivatives to be measured at cost rather than fair value, where the fair value cannot be reliably determined, has been eliminated with fair value measurement being required for all of these instruments.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is an exit price, which may differ from the transaction (entry) price.

 
 

We value the above for various purposes, including:

  • Financial reporting under:
  • ASC 718 (formerly SFAS 123R) – Share-based Payment
  • FASB ASC 825 – Financial Instruments
  • IFRS 2 – Share-based Payment
  • IFRS 7 – Financial Instruments: Disclosures
  • IFRS 9 – Financial Instruments
  • Gift and estate tax valuations
  • Other tax-related purposes
 
 
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Convertible Notes and Cost of Debt

A Convertible note is a debt instrument that can be converted into stock at the option of the holder or the issuer. In other words, the investor has the option to convert the total amount of the note into equity at certain events. The complexity of such notes requires advanced valuation models in order to assess the fair value as required by the IFRS and US GAAP.

It is also required by IFRS and US GAAP, to assess the fair value of the implied cost of debt of various debt instruments, including liabilities to the Chief Scientist.