Re: Article: - David Intersimone on DevCo, the viability of Delphi,andTurbo Ruby


"Jon Robertson" wrote:
Brion L. Webster wrote:

My understanding is this is the Borland Legal position

The way I heard it explained is that SOX has regulations concerning
when revenue is reported. Take this simple scenario:
<snip>
I have no idea whether this is valid or not. It's just how I heard it
explained.

While I'm no CPA, I've long been a student of "creative" accounting. The
problem of when to recognize income is one of the more vexing and often
abused problems in accounting. I am fairly well acquainted with the IRS/SEC
rules governing declaring of income from a series of years future payments
resulting from things like licensing royalties or construction project
progress payments

So you can image how flabbergasted I was when Enron convinced the SEC to let
them use "mark to market" rules thus allowing them to declare as current
year income the entire estimated income for several years into the future at
the time it signed up a new project as a done deal.

Not only does that greatly distort and inflate the current year's income it
also means that at the beginning of the next year they had no cushion of
"booked" income and thus had to scramble with ever increasing frenzy
inventing even more schemes until they finally exploded.


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