On May 29, 2013, the AICPA's Financial Reporting Executive Committee issued the AICPA Accounting and Valuation Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation (the Guide), which replaces the 2004 edition of the practice aid on this topic. The Guide (also known as the Cheap Stock Guide) provides nonauthoritative valuation guidance and illustrations for preparers, auditors, and valuation specialists related to the issuance of privately-held company equity securities for compensation. It highlights practice issues related to estimating the fair value of a minority interest in a company’s privately issued securities. The Guide also illustrates techniques used to determine the fair value of a company and the methods used to allocate the company’s fair value to the components of its capital structure.
This Dataline provides a high level overview of the Guide.