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Hi, Please I have a question regarding my homework: Salvador Corporation made an investment in Letter.com, Inc., in exchange for 100,000 options to purchase Letter.com?s

Hi,

Please I have a question regarding my homework:

Salvador Corporation made an investment in Letter.com, Inc., in exchange for 100,000 options to purchase Letter.com?s stock at $20 per share. Since the stock options are not marketable, Salvador?s management has this derivative valued by a security appraiser. The appraiser uses an option-pricing model to determine the fair value of the derivative for the financial statements. Describe how you would audit the valuation of the stock options.

Thank you in advance!

image text in transcribed Hi, Please I have a question regarding my homework: Salvador Corporation made an investment in Letter.com, Inc., in exchange for 100,000 options to purchase Letter.com's stock at $20 per share. Since the stock options are not marketable, Salvador's management has this derivative valued by a security appraiser. The appraiser uses an option-pricing model to determine the fair value of the derivative for the financial statements. Describe how you would audit the valuation of the stock options. Thank you in advance

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