Re: Q2 for Patten Case ,
 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 <kkupiecki@arpartners.com> 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
kkupiecki@arpartners.com