Groupon Inc., headquartered in Chicago, IL, is a 'local commerce marketplace that connects merchants to consumers by offering goods and services at a discount'. Groupon began operations in 2008 as a private company and grew rapidly during the first few years. The Company filed its first Form S-1, the IPO prospectus, with the SEC on June 2, 2011 and successfully completed its IPO in early November 2011, selling 35 million shares at $20 per share to raise $700 million. The company's stock price, however, has drifted from above $30 on November 4, 2011, its first day of trading as a public company, to about $5 in October 2016.

Among all the problems Groupon has faced are some accounting woes that arose right after Groupon first filed Form S-1. SEC sent a comment letter on Groupon's S-1 on June 29, 2011 that discussed a number of issues S-1 filed on June 2, 2011. (http://www.sec.gov/Archives/edgar/data/1490281/000000000011039811/filename1.pdf). Groupon responded to the comments on July 14, 2011. (http://www.sec.gov/Archives/edgar/data/1490281/000104746911006336/filename1.htm). More exchanges between SEC and Groupon can be located on EDGAR using filing type 'UPLOAD' (SEC letters) and 'CORRESP' (Company responses).

Required:

Locate on the SEC EDGAR the S-1 filed by Groupon on June 2, 2011, and the amended S-1 (S-1/A) filed on November 1, 2011. Using the S-1's, SEC's letter dated June 29, 2011, and Groupon's response dated July 14, 2011, write a memo (up to 3 pages, 12-point Times New Roman font, one-inch margin on all sides, doublespacing) using the format in the Memo Guidelines to address the following questions:

1. In the original S-1 filing, Groupon presented a non-GAAP measure called ACSOI. It was later removed after the SEC objected.
   1. What is ACSOI? How is it defined? Why do you think Groupon would prefer to use this measure rather than GAAP earnings?
   2. Why did the SEC question the inclusion of ACSOI in Groupon's S-1?
   3. Do you agree with Groupon's argument that discretionary expenses, such as subscription acquisition costs, should be excluded from the financial measures of a company's performance?
2. One of the key comments from the SEC involved Groupon's choice between gross and net reporting for revenues.
   1. Compare the reported revenues, for fiscal years 2008, 2009, and 2010, in the original S-1 (June 2, 2011) and the amended S-1 (November 1, 2011). What caused the changes? Cite the FASB Codification for authoritative support of the changes.
   2. Which of the two amounts do you think Groupon preferred? Why did they prefer it? Do you agree with Groupon or SEC on this matter? Briefly explain.