revenue recognition
Apple Inc. designs, manufactures, and markets personal computers, mobile communication devices, and portable digital music and video players and sells a variety of related software, services, peripherals, and networking solutions. The Company sells its products worldwide through its online stores, its retail stores, its direct sales force, and third-party wholesalers, resellers, and value-added resellers. (Source: Company Form 10-K)
Refer to the financial reports of Apple, Inc. for the year ended September 25, 2010
+Concepts+
a. In your own words, define "revenues." Explain how revenues are different from "gains."
b. Describe what it means for a business to "recognize" revenues. What specific accounts and financial statements are affected by the process of revenue recognition? Describe the revenue recognition criteria outline in the FASB's Statement of Concepts No. 5.
c. Refer to the Revenue Recognition discussion in Note 1. In general, when does Apple recognize revenue? Explain Apple's four revenue recognition criteria. Do they appear to be aligned with the revenue recognition criteria you described in part b, above?
d. What are multiple-element contracts and why do they pose revenue recognition problems for companies?
e. In general, what incentives do managers have to make self-serving revenue recognition choices?
Refer to the financial reports of Apple, Inc. for the year ended September 25, 2010
+Process+
.f. Refer to Apple's revenue recognition footnote. In particular, when does the company recognize revenue for the following types of sales?
I. iTunes songs sold online. ii. Mac-branded accessories such as headphones, power adaptors, and backpacks sold in the Apple stores. What if the accessories are sold online? iii. iPods sold to a third-party reseller in India.
g. Refer to Apple's revenue recognition footnote. Consider the sale of peripheral products obtained from other companies, such as Logitech speakers. How would Apple determine the
Refer to the financial reports of Apple, Inc. for the year ended September 25, 2010
+Concepts+
a. In your own words, define "revenues." Explain how revenues are different from "gains."
b. Describe what it means for a business to "recognize" revenues. What specific accounts and financial statements are affected by the process of revenue recognition? Describe the revenue recognition criteria outline in the FASB's Statement of Concepts No. 5.
c. Refer to the Revenue Recognition discussion in Note 1. In general, when does Apple recognize revenue? Explain Apple's four revenue recognition criteria. Do they appear to be aligned with the revenue recognition criteria you described in part b, above?
d. What are multiple-element contracts and why do they pose revenue recognition problems for companies?
e. In general, what incentives do managers have to make self-serving revenue recognition choices?
Refer to the financial reports of Apple, Inc. for the year ended September 25, 2010
+Process+
.f. Refer to Apple's revenue recognition footnote. In particular, when does the company recognize revenue for the following types of sales?
I. iTunes songs sold online. ii. Mac-branded accessories such as headphones, power adaptors, and backpacks sold in the Apple stores. What if the accessories are sold online? iii. iPods sold to a third-party reseller in India.
g. Refer to Apple's revenue recognition footnote. Consider the sale of peripheral products obtained from other companies, such as Logitech speakers. How would Apple determine the