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In applying the treasury stock method, a simple average of market prices usually will be adequate. As noted in ASC 260-10-55-5, closing daily market prices are generally adequate for use in computing the average market price. When prices fluctuate widely, however, an average of the daily high and low price usually would be more representative. A reporting entity should consistently apply the method used to compute the average market price, unless it is no longer representative because of changed conditions.
When market prices are unavailable (e.g., the pre-IPO period for a reporting entity going public, or a reporting entity that has been delisted) for periods presented in the financial statements, management should use its best estimate of the fair value of the entity’s shares during the period. Management’s determination of fair value of its shares should be consistent with the fair values and assumptions used in the calculation of the reporting entity’s stock compensation expense and disclosures.

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