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To: Jeffrey S. Mitchell who wrote (6156)	5/9/1998 2:53:00 PM
From: Jeff Litwin	Respond to of 10786

I am a COO at a service company and we recognize revenue at the time we incur the expense. To put this in ALYD terms, as they are paying for their staff to review and revise code they would recognize the appropriate percentage of revenue for the percentage of code revised. This is not to be confused with cash flow, as, by contract, we often do not get paid for another 30 days. Hope this helps.

To: Jeffrey S. Mitchell who wrote (6156)	5/10/1998 9:17:00 AM
From: JDN	Read Replies (1) \| Respond to of 10786

Dear Jeff: Since you mentioned my name I feel I must say something. First off, there is NO revenue recognition method allowable for public companies that allows recognition of any upfront deposits as revenue. That would be the cash receipts method only acceptable for private NON CORPORATE taxpayers not any corporations or certainly PUBLIC corporations. The must use the ACCRUAL method which is broken down further to COMPLETED CONTRACT and PERCENTAGE OF COMPLETION methods. I did not go back and check footnote number 1 which would explain the method use but I am very sure it would be the Percentage of Completion method. Which works pretty much as its name indicates, revenue is recognized as work is completed. HAS NOTHING TO DO WITH CASH RECEIPTS OR BILLINGS. JDN