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Technology Stocks : America On-Line: will it survive ...?
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To: cody andre who wrote ()2/14/1997 9:45:00 AM
From: Todd Daniels   of 13594
 
The $24m estimated refund charge taken in Dec is for service in
Jan as well as Dec. The Jan revenue to be refunded was not booked
in Q2 but will be booked in Q3. If that's 50%, then it will have
positive $12m impact on pre-tax earnings, or $0.127/share.

AOL booked the Jan refund expense in December under an accounting
principle of recognizing a future charge in the period when the event
that caused it began -- in this case the overload.

However, because AOL booked the charge below the line it should
in its Q3 report show the corresponding revenue in the same place,
rather than above the line as it did with the revenue corresponding
to the Dec refund amounts.
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