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Apple Revenue Recognition
Apple Revenue Recognition
Apple Revenue Recognition
The questions 1 and 2 concern Apple’s revenue recognition policy for all of its products. The
questions 3, 4, and 5 concern Apple’s revenue recognition policy for iPhone only.
1. Estimate the amount of annual revenue that would have been reported in the fiscal year
2008 (ended September 27, 2008) if Apple had never deferred revenue on any of its
products.
2. How would Apple’s financial statements (i.e., Balance Sheet, Income Statement, and
Statement of Cash Flows) for fiscal year 2008 have changed if Apple had never deferred
revenue on any of its products?1 Ignore any potential tax effects.
3. Briefly explain how Apple recognizes iPhone revenue. Why does Apple provide non-
GAAP financial results?
5. Should Apple lobby the Financial Accounting Standards Board (FASB) to change the
revenue recognition rules for smartphones?
1
Footnotes to Exhibit 1c provide balances for deferred revenues and costs.