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Technology Stocks : America On-Line: will it survive ...?
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To: Todd Daniels who wrote (1726)2/14/1997 10:20:00 AM
From: Joel Sternberg   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.<

Which amounts, of course, to more AOL-patented shenanigans. The reserve is booked as a one-time charge in the last quarter, while the revenues which they are ostensibly offsetting, will be allowed to beef up operating revenue (profits?) in this quarter. AOL has never found an expense that it could not account for as a one-time charge.
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