Salvador Corporation made an investment in Letter.com, Inc., in exchange for 100,000 options to purchase Letter.coms stock
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Question:
Salvador Corporation made an investment in Letter.com, Inc., in exchange for 100,000 options to purchase Letter.coms stock at $20 per share. Since the stock options are not marketable, Salvadors 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.
A couple of paragraphs will be a sufficient answer with all academic sources in APA format.
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