ACSOI (Adjusted Consolidated Segment Operating Income) (also called Adjusted CSOI) is a non-

GAAP Gaap (also ''Tap'', ''Coap'', ''Taob'', ''Goap'') is a demon that is described in demonological grimoires such as ''the Lesser Key of Solomon'', Johann Weyer's ''Pseudomonarchia Daemonum'', and the Munich Manual of Demonic Magic, as well as Jac ...

accounting metric. The metric amortizes marketing and acquisition costs over several accounting periods. The "Adjusted" part of the metric increases ("inflates") a company's reported net income in the most recent accounting period. The rationale behind the use of ACSOI is that marketing and subscriber acquisition expenses have value long into the future: they build a brand; therefore, they should be spread out over time. Cash spent on marketing is not expensed: it is converted into another asset ("subscriber acquisition assets, net") on a company's

balance sheet In financial accounting, a balance sheet (also known as statement of financial position or statement of financial condition) is a summary of the financial balances of an individual or organization, whether it be a sole proprietorship, a business ...

. This presentation of net income is prohibited by the

Financial Accounting Standards Board The Financial Accounting Standards Board (FASB) is a private standard-setting body whose primary purpose is to establish and improve Generally Accepted Accounting Principles (GAAP) within the United States in the public's interest. The Securi ...

, arbiters of GAAP (Generally Accepted Accounting Principles) in the United States. In GAAP, marketing expenses may be accrued in some situations as prepaid expenses, but only amortized in special cases. Deferred acquisition costs are typically only allowed for amortizing the acquisition costs of customers in businesses like

insurance Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to hedge ...

, where the amortization occurs over the well-defined duration of a contract. ACSOI can be a useful internal metric for businesses to determine financial performance and to make strategic management decisions, if they believe their subscriber acquisition costs are an up-front cash outlay that truly builds long-term customer assets commensurate with that outlay. A main argument for not using this metric in GAAP accounting is that there is a key difference between subscribers and customers: customers make purchases and generate

revenue In accounting, revenue is the total amount of income generated by the sale of goods and services related to the primary operations of the business. Commercial revenue may also be referred to as sales or as turnover. Some companies receive reven ...

for the business; it may be faulty to assume that all subscriber acquisition costs can be amortized as assets if only an unknown portion of the acquired subscribers will actually convert to customers. The use of ACSOI came under scrutiny in August 2011, when it was revealed the company

Groupon Groupon is an American global e-commerce marketplace connecting subscribers with local merchants by offering activities, travel, goods and services in 13 countries. Based in Chicago, Groupon was launched there in November 2008, launching soon af ...

used the metric to present a net gain in operating income in their

IPO An initial public offering (IPO) or stock launch is a public offering in which shares of a company are sold to institutional investors and usually also to retail (individual) investors. An IPO is typically underwritten by one or more investment ...

filing. Without the ACSOI metric, Groupon would have stated a net loss.

References

{{Reflist Accounting in the United States