are six specific references/ guidelines used by accountants and investment bankers in the valuing publicly-listed securities. These include: 1.) Emerging Issues Task Force (EITF) 96-18: Accounting for Equity Instruments Issued to other than Employees for Acquiring, or in Conjunction with Selling, Goods or Services; 2.) FASB Statement No. 123, Accounting for Stock-Based Compensation; and 3.) FASB No. 123 (revised 2004), Share-Based Payment; FASB Interpretation No. 28; 4.) Accounting for and Other Variable Stock Option Stock Appreciation Rights or Award Plans; 5.) SEC Staff Accounting Bulletin No. 57, Contingent Stock Purchase Warrants; and 6.) SEC Staff Accounting Bulletin No. 95 (untitled, which deletes SAB 57). Each are commented on below. 1.) Emerging Issues Task Force (EITF) 96-18: Accounting for Equity Instruments Issued to other than Employees for Acquiring, or in Conjunction with Selling, Goods or Services; 2.) FASB Statement No. 123, Accounting for Stock-Based Compensation; and 3.) FASB No. 123 (revised 2004), Share-Based Payment; FASB Interpretation No. 28; Statement 123 establishes the measurement principles for transactions in which equity instruments are issued in exchange for the receipt of goods or services. Paragraph 8 of Statement 123 states that those transactions should be measured at the fair value of the consideration received or the fair value of the equity instruments issued, which is a more reliably measurement. Statement 123 does not, however, prescribe the measurement date or provide guidance on recognition of the cost of those transactions. Also, it does not address the accounting for equity instruments issued in conjunction with selling goods or services, such as sales incentives. Specific Reference Toa Valuing a Non-Active, Publicly-Traded Securities: The Fair Value Method However, in IAS 39 Financial Instruments: Recognition and Measurement states: best evidence of fair is quoted prices in an active market. If the market for “the a financial instrument is not active, an entity establishes value” by using a “fair valuation technique. . . . . . A valuation technique (a) incorporates all factors that market participants would consider in setting a price and (b) is consistent with accepted economic methodologies for pricing financial instruments. 4.) Accounting for Stock Appreciation Rights and Other Variable Stock Option or Award Plans:
are six specific references/ guidelines used by accountants and investment bankers in the valuing publicly-listed securities. These include: 1.) Emerging Issues Task Force (EITF) 96-18: Accounting for Equity Instruments Issued to other than Employees for Acquiring, or in Conjunction with Selling, Goods or Services; 2.) FASB Statement No. 123, Accounting for Stock-Based Compensation; and 3.) FASB No. 123 (revised 2004), Share-Based Payment; FASB Interpretation No. 28; 4.) Accounting for Stock Appreciation Rights and Other Variable Stock Option or Award Plans; 5.) SEC Staff Accounting Bulletin No. 57, Contingent Stock Purchase Warrants; and 6.) SEC Staff Accounting Bulletin No. 95 (untitled, which deletes SAB 57). Each are commented on below. 1.) Emerging Issues Task Force (EITF) 96-18: Accounting for Equity Instruments Issued to other than Employees for Acquiring, or in Conjunction with Selling, Goods or Services; 2.) FASB Statement No. 123, Accounting for Stock-Based Compensation; and 3.) FASB No. 123 (revised 2004), Share-Based Payment; FASB Interpretation No. 28; Statement 123 establishes the measurement principles for transactions in which equity instruments are issued in exchange for the receipt of goods or services. Paragraph 8 of Statement 123 states that those transactions should be measured at the fair value of the consideration received or the fair value of the equity instruments issued, which is a more reliably measurement. Statement 123 does not, however, prescribe the measurement date or provide guidance on recognition of the cost of those transactions. Also, it does not address the accounting for equity instruments issued in conjunction with selling goods or services, such as sales incentives. Specific Reference Toa Valuing a Non-Active, Publicly-Traded Securities: The Fair Value Method However, in IAS 39 Financial Instruments: Recognition and Measurement states: “the best evidence of fair is quoted prices in an active market. If the market for a financial instrument is not active, an entity establishes “fair value” by using a valuation technique. . . . . . A valuation technique (a) incorporates all factors that market participants would consider in setting a price and (b) is consistent with accepted economic methodologies for pricing financial instruments. 4.) Accounting for Stock Appreciation Rights and Other Variable Stock Option or Award Plans:
Valuation-2016.docx