Proposed accounting rule changes will let Apple finally record iPhone revenues all at once in the quarter in which it is earned without resorting to spreading it out over two years.
According to a reading of certain accounting rules relating to the Sarbanes-Oxley Act, items that gain significant new functionality after the sale—due to a firmware update, for instance—can't have the revenue recorded at the time of sale.
Since Apple planned to potentially offer new features in software updates, it records revenue from the sale if iPhones over a period of two years—the length of a standard carrier contract.
"It is our belief that investors, analysts and preparers would benefit significantly from the proposed changes," wrote Apple VP Betsy Rafael in a letter to the Financial Accounting Standards Board.
Thanks to lobbying by Apple and other tech companies, the FASB has tentatively approved changes to the rules that could make subscription accounting a thing of the past.
While the accounting and revenue reporting headaches—and possible boost to AAPL—is a significant advantage of this rule change, we thing the goodwill Apple would earn from free iPod touch OS updates would be incalculable.
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This is the best summary I could come up with:
Proposed accounting rule changes will let Apple finally record iPhone revenues all at once in the quarter in which it is earned without resorting to spreading it out over two years.
According to a reading of certain accounting rules relating to the Sarbanes-Oxley Act, items that gain significant new functionality after the sale—due to a firmware update, for instance—can't have the revenue recorded at the time of sale.
Since Apple planned to potentially offer new features in software updates, it records revenue from the sale if iPhones over a period of two years—the length of a standard carrier contract.
"It is our belief that investors, analysts and preparers would benefit significantly from the proposed changes," wrote Apple VP Betsy Rafael in a letter to the Financial Accounting Standards Board.
Thanks to lobbying by Apple and other tech companies, the FASB has tentatively approved changes to the rules that could make subscription accounting a thing of the past.
While the accounting and revenue reporting headaches—and possible boost to AAPL—is a significant advantage of this rule change, we thing the goodwill Apple would earn from free iPod touch OS updates would be incalculable.
The original article contains 671 words, the summary contains 191 words. Saved 72%. I'm a bot and I'm open source!
Any reason why y'all as a community don't like this content? Is it because it's old? I indicated that in the title. I think it captures an interesting historical time and reminds us of things we take for granted now a days.