America Online, INC.
Case number:
A01-04-0002
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.
Case number:
A01-04-0002
Subject:
Accounting and Control
Year:
Setting:
U.S. 1995
Length:
7 pages
Source:
Library