Clear Power Reports

Our answer to the challenge of valuing embedded derivatives

Our valuation report provides you with everything you need to record your derivatives:

• Journal entries
• Debt rollforward
• Derivative rollforward
• Changes due to pricing and conversions and new instruments

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. Classically, there are two methods in use for valuing a derivative, Black-Scholes-Merton (BSM) and Binomial lattice models.

The valuation process can be complex. Our staff at Mispar Consulting, LLC. 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. Please see our Terms of Use for more details.