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Seminar 6 AOL Discussion Questions

Seminar 6 AOL Discussion Questions

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Published by: Chen YuanJun Joe on Aug 25, 2011
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AA301 Business Valuation and Analysis Seminar 06 Case Study Questions: AOL, Inc. [HBS 9-196-130] 1.

Prior to 1995, why was America Online (AOL) so successful in the commercial online industry relative to its competitors CompuServe and Prodigy? 2. As of 1995, what are the key changes taking place in the commercial online industry? How are they likely to affect AOL’s future prospects? 3. Was AOL’s policy to capitalize subscriber acquisition costs justified prior to 1995? 4. Given the changes discussed in question 2, do you think AOL should change its accounting policy as of 1995? Is the company’s response consistent with your view? 5. What would the effect on AOL’s 1994 and 1995 ending balance sheets if the company had followed the policy of expensing subscriber acquisition outlays instead of capitalizing them? What would the effect of expensing subscriber acquisition costs on AOL’s 1995 income statement?

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