Message-ID: <20341514.1075843191474.JavaMail.evans@thyme> Date: Mon, 18 Sep 2000 03:44:00 -0700 (PDT) From: jeff.dasovich@enron.com To: kkupiecki@arpartners.com Subject: Re: Q2 for Patten Case Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Jeff Dasovich X-To: Kimberly Kupiecki @ ENRON X-cc: X-bcc: X-Folder: \Jeff_Dasovich_Dec2000\Notes Folders\Sent X-Origin: DASOVICH-J X-FileName: jdasovic.nsf No, I don't think I'd make a better accountant. But I did ask a few questions of my accountant brother-in-law. You did a great job. I don't know how much time I'll have, but I'll see if I can throw in a bit of text and raise the issues. See you tonite. Kimberly Kupiecki on 09/18/2000 09:53:30 AM To: jdasovic@enron.com cc: dwindham@uclink4.berkeley.edu, jjackson@haas.berkeley.edu, jcjcal02@aol.com Subject: Re: Q2 for Patten Case Hi Jeff, I guess you would make a better accountant than me. Your analysis sounds right. Feel free to make changes as fit. My apologies for missing out on these items. At 06:18 PM 9/17/00, jdasovic@enron.com wrote: >Hey, nice spreadsheet. Two minor questions: > >1) Isn't the provision for taxes on the income statement actually the taxes >on the 'income' they made from using the sales method (equal to 46%), >rather than what they pay will actually pay the IRS under the installment >method? I think the notes show how instead of paying the 4.1$ based on >their recognized income, they pay some itty bitty amount based on >installment. If so, I think they actually get a 46% tax break on the 1 >million and change that they lose using a cash basis. Still a loss, just >not so big. Anyway, I'm not sure if I'm thinking straight on this, but >that's how I read the numbers. > >2) Does the balance sheet have to change a little? For example, does >shareholder equity change since the income that goes to retained earnings >is now a loss, rather than a gain? Also, if revenue is recognized on a >cash basis and is now much smaller, there needs to be another liability to >equal out the decrease in revenues with the still large notes receivables >on the asset side (as you note in the answer the notes recievables stays >the same). Seems like they might need a liability like "deferred profits" >or some such thing, such that the ["deferred profits" + revenues >(recognized on cash basis)] = notes receivables. > >Anyway, I may not have this right, but thought I'd bring it up to see what >you think. > >Best, >Jeff Kimberly Kupiecki Senior Account Executive A&R Partners kkupiecki@arpartners.com (650) 762 2800 main (650) 762 2825 direct fax (650) 762 2801