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Technology Stocks : METROMEDIA FIBER NETWORK (MFNX)
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To: Dennis O'Bell who wrote (656)10/27/1999 10:04:00 AM
From: Curtis E. Bemis  Read Replies (1) of 1983
 
..when revenues are to be "recognized" over a long
period of time? Is it good or bad?

I don't know about good or bad, but the Infernal Revenue
Service, maybe FASB, has had a look at "deferred revenue".
The accounting practices of MFNX are outlined in the last
10Q--

***snip***
RECOGNITION OF REVENUE
The Company recognizes revenue on telecommunications services ratably over
the term of the applicable lease agreements with customers. Amounts billed in
advance of the service provided are recorded as deferred revenue. In
addition, the Company occasionally enters into sales of portions of its
network. For those sales occurring prior to completion of the portion of the
network, the Company recognizes revenue using the percentage of completion
method. Under the percentage of completion method, progress is generally
measured on performance milestones relating to the contract where such
milestones fairly reflect the progress toward contract completion. Network
construction costs include all direct material and labor costs and those
indirect costs related to contract performance. General and administrative
costs are charged to expense as incurred. If necessary, the estimated loss on
an uncompleted contract is expensed in the period in which it is identified.
Contract costs are estimated using allocations of the total cost of
constructing the specific phase of the network. Revisions to estimated
profits on contracts are recognized in the period that they become known. The
Company also provides installation services for its customers, and as these
services typically are completed within a short time period, the Company
records the revenues and related costs for these services under the completed
contract method.
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