Research Essay Topic Example: – 3. Was AOL’s policy to capitalize subscriber acquisition costs justified prior to 1995? Ans: AOL’s accounting policy was labeled aggressive and capitalized its subscriber acquisition costs when its archrival CompuServe didn’t.Need Assignment Help Online, Homework Solutions & Case Study Answers? Order Custom Research Essay Writing Service.
– AOL’s biggest expenditure was the cost of attracting new subscribers and maximizing shareholders’ value: 1. Separate registration numbers and passwords were issued to customers. They cost more than $40 per new subscriber in 1994. 2. AOL aggressively marketed its online service both directly and indirectly. 3. To retain new subscribers and increase customer loyalty & satisfaction, AONeed Assignment Help Online, Homework Solutions & Case Study Answers? Order Custom Research Essay Writing Service.
– The noteable accounting procedures followed by AOL were as follows: :a.Need Assignment Help Online, Homework Solutions & Case Study Answers? Order Custom Research Essay Writing Service.Online Assignment Help Service – – Get top-rated homework assistance online by professional writers. Free of AI and Plagiarism.- AOL’s amortization period for subscriber acquisition costs was about 15 months, such aggressive accounting was attributed to the bundling & direct mail marketing practices b. During September 1995, the company modified the components of subscriber acquisition costs as incurred AnalysisNeed Assignment Help Online, Homework Solutions & Case Study Answers? Order Custom Research Essay Writing Service.
– a. It is not advisable for AOL to capitalize the marketing costs because in 1990s Web was being established. This would definitely impact the sales. Instead of amortizing the Acquisition Costs for 15 months, if we treat it as single lumpsum cost, the Income statement shows a loss for the period.Need Assignment Help Online, Homework Solutions & Case Study Answers? Order Custom Research Essay Writing Service.
– If AOL were to write off all capitalized subscriber acquisition costs the effect on the 1995 balance would be a $77,229,000 reduction in other assets and stockholders’ equity. If all the subscriber acquisition costs incurred in fiscal year 1995 were expensed in 1995, the effect on the income statement would be an increase in marketing expense of $50,837,000 and an increase in net loss of $50,837,000Need Assignment Help Online, Homework Solutions & Case Study Answers? Order Custom Research Essay Writing Service.
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