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Journal entry — AICPA issues working draft of a new chapter of the cheap stock guide

Published on: Aug 13, 2012

Last week, the AICPA’s Financial Reporting Executive Committee (FinREC) released for public comment a working draft of a new chapter from the AICPA Accounting and Valuation Guide Valuation of Privately Held Company Equity Securities Issued as Compensation, also referred to as the “Cheap Stock Guide.” The new chapter — Chapter 8, “Inferring Value From Transactions in a Private Company’s Securities” — contains valuation considerations and existing U.S. GAAP accounting guidance related to fair value measurements of equity securities based on observable prices from private transactions or secondary market transactions involving identical or similar equity securities of the same enterprise.

FinREC also released the latest working draft of the entire Cheap Stock Guide, but only to provide context for the new chapter and to solicit feedback on Q&As 12.1 through 12.15 from Chapter 12, “Common Valuation Questions.” FinREC is not soliciting comments on the entire guide.

Comments on the working draft chapter and Q&As 12.1 through 12.15 are due by October 1, 2012.

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