America Online, INC.
Case #:
A01-04-0002
Fields:
Accounting and control
Abstract:
This case concerns America Online's accounting for its subscriber acquisition costs and product development costs. By 1996, these "assets" were valued at over $300 million, or approximately five times AOL's recent pretax earnings.
Teaching:
The purpose of the case is to provide a forum to evaluate the practice of cost capitalization employed by some early-stage technology companies. Students are asked to evaluate AOL's policy of capitalizing subscriber acquisition costs and product development costs, and to restate AOL's reported earnings using an alternative accounting treatment of their choice.
Industry:
Technology, Internet
Setting:
U.S. 1995
Length:
7 pages
Source:
Library
Published:
2004
Subject:
Accounting and Control
