Accounting for the iPhone at Apple Inc.
Posted: 18 Feb 2012
Date Written: February 24, 2011
Apple initially recognized revenue associated with its iPhone product using subscription accounting. However, in 2008, the company started providing non-GAAP supplemental numbers where substantially all of the revenue was recognized upfront. Market participants' reactions to the disclosure were mixed. Was Apple "right" in arguing that subscription accounting was inadequate for the iPhone?
Learning Objective: The case provides an opportunity to discuss criteria for revenue recognition in the context of multiple deliverables. It also serves to illustrate the interactive nature of the standard setting process.
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