Do you tickle pink at account statement rules ? Does a tingle rivulet up your spine everytime someone so much as whisper “ by and large Accepted Accounting Principles ” ? Does talk of subscription accounting have you to fan yourself while proclaiming “ Ah dodeclare ! ” If so , you may want to breathe into this report dish for a minute , because we ’re about to getcrazy . Apple ’s chief accountant hasbacked a proposalthat would change the way companies would track certain product sales , so it ’s time to break out the smell salts .
As an ardent follower of all matter bookkeeping , you no doubt already know that Apple has been accounting for some of its products — most notably the iPhone — via the aforementioned “ subscription accounting ” method . Since the troupe reuglarly rolls out new software system update , such as the latterly eject iPhone 3.1 , which let in new features , it accounts for the revenue from the product over the intersection ’s lifetime ( which it considers two years ) . That ’s also why the iPod touch climb , which are n’t capable to subscription accounting , cost money .
While this allow the company to last out unfeigned to the letter of the natural law , Apple has argued that these numbers do n’t accurately reflect just how gibe - bang successful the iPhone has been — rent ’s call it the “ hotcakes ” factor . As a result , the company has get into the habit of providing adapt , non - GAAP figures alongside its common numeral , often with significant difference . For example , in the most recent quarter , Apple cover final income of $ 1.23 billion under GAAP — not uncollectible , but if you decimate the subscription accounting , that phone number balloons to an even more impressive$1.94billion .
The propose change to method of accounting rules is the dominion of the Financial Accounting Standards Board ( who you may call back from its recent macrocosm tour , pay heed by throngs of cry teenage girls ) , whose emerge topic Task Force has already given a thumbs up . The suffrage for last blessing could descend in November , although Apple ’s new financial twelvemonth begins on October 1st .
While it might not be the sexiest subject around , a variety in the accounting routine could have a mess of impact on Apple ’s bottom line , and thus how near Apple ’s financials reckon to investors — and that ought to be enough to make you perspire .
