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Technology Stocks : America On-Line: will it survive ...?
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To: Brian K Crawford who wrote (949)1/7/1997 9:49:00 AM
From: Joel Sternberg   of 13594
 
>Joel, this would be a violation of generally accepted accounting principles, and AOL would not find any
support for this approach from their CPA,s. Hence, they will recognize any revenues arising from cash
prepayments evenly over the life of the agreement, (either 12 or 24 months).

Conversely, AOL's auditors, Ernst & Young, had no trouble with signing off on the prior accounting
treatment used for prepaid subscriber acquisition costs, as it represented a not unreasonable approach to
matching costs and revenues, and one that is widely used in other subscription based industries, such as
magazine publishing.<

Brian, thanks for your post and the comeuppance that I deserved. I asked people about the GAAP stance on this and they agree with you totally. I should have checked my facts with people more in the know before posting.
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