Revenue Recognition: Apple Inc. THE COMPANY Our analysis of Apple Inc. will incorporate the general overview of the company and how it records it revenues. We will observe how they make an honest effort to be within compliance of all accounting standards according to the Financial Accounting Standards Board for recording and disclosure of its income. Apple’s leading competitor‚ Google Inc.‚ will also be examined to see whether they are comparable to Apple and still within compliance of the Securities
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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
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The issue of revenue recognition practices is an area that has received a lot of attention from regulators. Whenever there is a report of financial restatements or negative earnings‚ regulators pay extra attention to review the financial statements in order to verify that that there are not any indications of financial fraud or that the organization overstepped their boundaries in the area of managed earnings. The reason that regulators have taken a special interest in financial accounting and potential
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Statement Four Revenue recognition issues top the list of reasons for financial reporting restatements and one of the methods for creative accounting practices. Table of Contents Table of Contents 1 Introduction 3 Literature Review 4 Revenue recognition 4 Sale of goods 4 Rendering of services 5 Interest‚ royalties‚ and dividends 5 Creative Accounting 5 To meet internal targets 6 Meet external expectations. 6 Provide income smoothing. 6 Taxation 6 Change in management
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Q3: Should Apple lobby the FASB to change the revenue recognition rules for smartphones? In our opinion‚ Apple should lobby FASB to change the revenue recognition rules for smartphones‚ given the following reasons:- 1. Under “non-GAAP measures”‚ Apple’s performance looked much better than that under GAAP measures. Please find below a table1 summarizing the differences of key financial data between GAAP and non-GAAP measures for the fourth quarter of 2008:- Q4 2008 GAAP ($ billions) Non-GAAP
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The revenue recognition principle is a foundation of accrual accounting and one of the main principles of GAAP. The revenue recognition principle is a set of guidelines that helps accountants to identify when a revenue event has taken place and how to appropriately record cash exchanges before‚ during‚ and after the revenue event. According to the revenue recognition principal‚ revenue must (1) be realized or realizable and (2) earned‚ in order to be recognized. According to the SEC revenue is realized
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A: The primary criteria the auditor should use in determining revenue to be recognized are: (1): persuasive evidence of an arrangement exists. (2): Delivery has occurred or services have been rendered. (3): The seller’s price to the buyer is fixed or determinable. (4): Collectability is reasonably assured. The most basic principle for revenue recognition is revenue has been realized or realizable and earned. B: (1) a: Multiple deliverable. Does the software and one year internet service has
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‚ Fan‚ J.‚ Lang‚ H.P.‚ 2002. Disentangling the incentive and entrenchment effects of large shareholdings. Journal of Finance 57‚ 2741–2742. Credit Lyonnais Securities Asia‚ 2004. CG Watch: Corporate Governance in Asia-Spreading the Word‚ Changing Rules in Asia. Davidson III‚ W.N.‚ Xie‚ B.X.‚ Xu‚ W.‚ 2004. Market reaction to voluntary announcements of audit committee appointments: the effect of financial expertise DeFond‚ M.L.‚ Hann‚ R.N.‚ Hu‚ X.‚ 2005. Does the market value financial expertise on audit
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ESTIMATING THE RISK PREMIUM USING HISTORICAL DATA: A CASE OF THE NSE Introduction This study seeks to estimate the risk premium of a company using historical data. Analysts use historical data to estimate the risk premium of a company’s equity. This is because the historical data is readily available from the company’s financial statements and the securities exchanges for example the Nairobi Stock Exchange (NSE) in Kenya. Historical market data can be used to compute average returns and a measure
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Methods of Revenue Recognition 1. The Accrual Method of Revenue Recognition The most common revenue recognition system is based on the accrual method. Under this approach‚ if the revenue recognition rules presented in the last section have been met‚ then revenue may be recognized in full. In addition‚ expenses related to that revenue‚ even if supplier invoices have not yet been received should be recognized and matched against the revenue. The name of this method does not imply that the revenue
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