1st Edition
by AICPA (Author)
This new Guide has been
developed by AICPA staff and the Equity Securities Task Force and is the
first in a series of 3 NEW AICPA Accounting Valuation Guides to be
released. This long anticipated release reflects best practices
developed over the previous decade.
Since the issuance of
FASB ASC 718 and 505-50 in 2004, valuing stock-based compensation
("cheap stock") has been a significant challenge for private companies.
This New Guide has been designed to mitigate those challenges. It brings
you practical guidance and illustrations related to accounting,
disclosures and valuation of privately held company equity securities
issued as compensation.
This guide includes:
- Evaluating
private and secondary market transactions — What should companies do
when transaction activity doesn't match their estimates of value?
- Adjustments
for control and marketability — How should companies think about the
value of the enterprise for the purpose of valuing minority securities?
When is it appropriate to apply a discount for lack of marketability,
and how should the estimated discount be supported?
- Highly
leveraged entities — How should companies incorporate the fair value of
debt in the valuation of equity securities? What is the impact of
leverage on the expected volatility of various securities?
- The relevance of ASC 820 (SFAS 157) to cheap stock issues
- Updated
guidance and illustrations regarding the valuation of, and disclosures
related to, privately held company equity securities issued as
compensation
This Guide also provides expanded and more
robust valuation material to reflect advances in the theory and practice
of valuation since 2004.
This edition includes guidance from
FASB ASC 718, 505-50, 820-10 and SSVS 1 which were all issued since the
last AICPA guidance dedicated to this issue.
