What is ASC 718 & 505-50?
ASC 718 provides guidelines on how to expense equity awards issued to employees.
These equity awards include options, RSAs, etc. The guidance outlines methods on how to determine the fair value of the options such as the Black Scholes Option Pricing Model, the Binomial (or Lattice) Model, and the Monte Carlo. Additionally, the accounting standards codification provides guidance on how to assess the proper amortization and expense allocation methods.
ASC 505-50 provides guidance on how to expense equity awards issued to non-employees.
The standard provides guidance on how to determine if the grant holder is a non-employee and recommends classifying grant holders who receive 1099's from the business as "non-employees" (with the exception of board members). ASC505-50 also provides guidance on valuation methodology and how to assess the proper amortization and expense allocation methods.