Under ASC 718, equity compensation awards with vesting and/or payout dependent on market conditions (e.g. performance against a peer group, average VWAP over a period, etc.) must be valued at the grant date, typically, via Monte Carlo simulation. The resulting value is expensed over the estimated vesting period.

As a key input to option value, the estimation of volatility plays a critical role in the expensing for equity compensation under ASC 718. For recently public or private companies the estimation can be somewhat challenging due to limited, or no, market trading history.

ASC 820 is an accounting standard that requires investments to be reported at fair value. In the case of convertible debt, the liability associated with the potential conversion of this debt into equity must be "marked to market" at each reporing period.

ASC 820 is an accounting standard that requires investments to be reported at fair value. In the case of warrants, the liability associated with the potential exercise of these instruments must be "marked to market" at each reporing period.