The accounting fraud's[1] the best part of the AOL CD lore. For fiscal years 1995 and 1996, AOL capitalized most of the costs of acquiring new subscribers

The accounting fraud's[1] the best part of the AOL CD lore. For fiscal years 1995 and 1996, AOL capitalized most of the costs of acquiring new subscribers as "deferred membership acquisition costs" ("DMAC") -- including the costs associated with sending disks to potential customers and the fees paid to computer equipment manufacturers who bundled AOL software onto their equipment -- and reported those costs as an asset on its balance sheet, instead of expensing those costs as incurred. The financial impact? Had these costs been properly expensed as incurred, AOL's 1995 reported pretax loss would have been increased from $21 million to $98 million (including the write-off of DMAC that existed as of the end of fiscal year 1994), and AOL's 1996 reported pretax income of $62 million would have been decreased to a pretax loss of $175 million. [1]https://www.sec.gov/litigation/admin/34-42781.htm https://www.sec.gov/litigation/admin/34-42781.htm