Revisiting volatility assumptions under ASC 718

Market volatility increased significantly in March 2020 due to the COVID-19 pandemic. This recent spike in volatility may lead to significant differences between historical and implied volatility measures. As a result, questions may arise regarding the treatment of the volatility assumption in valuation analyses, such as those performed under Accounting Standards Codification 718, Compensation – Stock Compensation (ASC 718). KPMG’s Valuation practice has created some valuation insights answering some of the more common questions.