Case: Accounting for the iPhone at Apple, Inc.

Case: Accounting for the iPhone at Apple, Inc.

Please answer the following questions. Limit your responses to four pages double spaced TOTAL for all four questions. They will be graded based on effort, not correctness. These should provide a good foundation for our next class discussion of the case.

1. Describe GAAP vs non-GAAP numbers and their impacts on the financial statements?

2. Which method best reflects the economic reality? GAAP revenue recognition criteria: a) Seller must have substantially performed its obligations to the customer (earning criterion), and b) Seller must have obtained an asset from the customer that it can reliably measure (realization criterion).

3. Should Apple lobby the FASB to change the revenue recognition rules for smartphones?

4. An interesting observation about the case that you would like to share with class.