<<I also would not be surprised if AOL did book pre-payed membership dues as current revenue. Technically, I do not think it is a violation of accounting rules, and AOL sure know how to bend those accounting rules.>>
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.
Paraphrasing Steve Case, the chatter about the subscriber acquisition accounting treatment was getting so loud no one could hear the rest of the story, so out it went.
Amen, C'est la vie, Let It Be, Yesterday's News, etc...
Brian |
