Dave,
According to the company's last 10K, ADVH's accounting of revenue recognition and development expenses are in compliance with standards:
Software Revenue Recognition:
"The Company recognizes revenue from the sale of its information systems and services (upon installation and acceptance), and from the licensing of its software to third parties (upon delivery). Certain of these third parties provide payment in advance for the development and installation of software, databases and systems. The Company accounts for these advance payments as deferred revenue when received, and recognizes revenue ratably over the period of time during which the software is delivered and services are performed. In December 1991, the American Institute of Certified Public Accountants issued Statement of Position ('SOP') 91-1, 'Software Revenue Recognition'. The Company's revenue recognition policy is in compliance with the provisions of the SOP."
If the company was recognizing revenue before delivery of the software, I'd be concerned, but I don't see that here.
Capitalizing Software Development:
"The Company develops computer software which is marketed to third parties. The Company capitalizes such costs in accordance with SFAS No. 86, 'Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed.' Amortization of such costs is provided using the straight-line method over the estimated economic life of the products, which is generally five years."
Research and Development
"Research and development costs are expensed as incurred by the Company."
So, from what I read in the company's 10K, I don't see anything wrong with the way ADVH does its accounting. Does anyone else?
John |
