Discussion Question Set #1 – iPhone at Apple (25 points) Lenny Allegretti 1. Which accounting method best reflects the economic reality? Put another way, which accounting numbers – the GAAP or non-GAAP numbers best reflects economic reality? [10 points] Economic reality can be defined as the overall outlook of the economy at a certain point in time. This outlook includes factors such as interest rates, politics, and speculation. In its Q4 financial results Apple reported both GAAP and non-GAAP revenue and net profit for the iPhone. Their GAAP results showed 7.9 billion in revenue and 1.1 billion in net profit. The non-GAAP showed revenue of 11.7 billion and net profit of 2.4 billion. The GAAP results reflect the usage of …show more content…
2. Should Apple lobby for their non-GAAP numbers to be sanctioned by FASB? [7.5 points] I believe that Apple should not lobby for their non-GAAP numbers to be sanctioned by FASB. Apple decided to use the subscription method due to consumer backlash at an upgrade fee for the iPhone. Today Apple holds a large portion of the smart phone industry. If a small upgrade fee for the iPhone was enacted I personally believe it would not affect sales. For example, people pay on average $75-$100 for their cell phone bill a month; a small $5 one or two time fee would not stray people from purchasing an iPhone. Therefore, there would be no need to lobby for the non-GAAP numbers because the new numbers with fees charged for upgrades would be accepted under GAAP. However, with the industry standard set at free upgrades for the consumer, it may be beneficial for Apple along with other smartphone companies to lobby for this. Realistically the smartphone market is a booming market. Time will tell if these companies will decide to lobby to the FASB. Even though I believe it is not necessary for Apple to do with their current stake in the market; I do believe that it may occur with the industry standard set. 3. Does it matter if the revenue recognition rule for smartphones changes? [7.5 points] We have established that there are two methods to recognize smartphone revenue: time of sale and subscription methods. The company providing the phone has the option on which one to
Generally accepted accounting principles (GAAP) allow companies wide latitude in the choice of accounting policies. After a firm chooses a set of accounting policies, current accounting rules permit changes from one alternative policy to another at the discretion of the management. Since reported accounting figures are widely used by a number of external parties, managers of firms have incentives to choose accounting policies in order to influence the behavior of these parties. A variety of managerial motives for
2. What is your assessment of the accounting problems at Dollar General? Did anything unethical occur? What evidence indicates that the misstatements were simply errors, with no deliberate intent? What reasons can you think of that would account for why the misstatements might well have been deliberate and not simply inadvertent errors?
SFAC No. 8 addresses the cost constraint on useful financial reporting, “Cost is a pervasive constraint that standard setters, as well as providers and users of financial information, should keep in mind when considering the benefits of a financial reporting requirement.” (SFAC No. 8 BC 3.47) However, the ability to place a dollar value and fully enumerate a cost or benefit is almost an impossible task for standard-setters. Additionally, there is no way to successfully identify and measure all of the economic consequences associated with a new standard. The FASB should be applauded though for advancing uniformity in accounting standards, however; uniform financial reporting suggests a one size fits all approach. “Smaller, non-publicly listed firms (and their auditors) argue that accounting standards are formulated mainly for larger, publicly traded firms” and that “compliance costs are disproportionately higher and the
The purpose of this report is to look at the advantages and disadvantages that would occur if the United States were to switch their financial reporting standards from U.S GAAP
The purpose of this report is to research the accounting and reporting standards of the Financial Accounting Standards Board (FASB) and report the impact FASB may have on our company. The following research explains the history and purpose of FASB, the accountability requirements on public corporations, the effectiveness of FASB in setting standards in order to improve financial reporting in the public
Making the company profitable at any cost and means is Reed’s goal, ethical or not. Fuller has explained the regulations and laws to the accounting department and to Reed, and Reed seems to not care about cost to the company, just profitability. Share prices will also remain high because of this decision to report in 2010. This would only benefit managers and personnel that have stock options, keeping them interested in the company and their investments only.
The documents that comprise GAAP vary in format, completeness, and structure. As a result, financial statement preparers sometimes are not sure whether they have the right GAAP; determining what is authoritative and what is not becomes difficult. In response to these concerns, the FASB developed the Financial Accounting Standards Board Accounting Standards Codification. The FASB’s primary goal in developing the Codification is to provide in one place all the authoritative literature related to a particular topic. Professional accountants pay for access to the FASB. The OU Accounting Department has paid for academic access to the FASB Codification. Our Login information is:
The general accepted accounting principles (GAAP) numbers ensure a level of consistency but they do not take into consideration the particularities of each firm, or at least of each industry. Collins et al. (1997) observed a decline in the value relevance of GAAP earnings, since 1953, and even though research on non-GAAP numbers starts and focuses around the late 1990s, in 1973 the Securities and Exchange Commission (SEC) issued a warning for the non-GAAP measures (Accounting Series Release No 142, SEC 1973).
Distinctively visual representations allow the audience to envisage different purposes crafting emotions which stay with us forever. Graphic depiction is a fundamental characteristic within distinctively visual, thus the audience is able to be exposed to the intense illustrations exemplified by composers. Spudvilla’s portrayal of “Woolvs in the sitee” demonstrates the child’s inability to reconcile with himself. Contrasting to this notion; the playwright “Shoe-horn Sonata” to expose the brutal reality of POW camps during WWII. Therefore, distinctively visual forces the audience to succumb to the barriers society creates.
(h) Arises from income statement activities that constitute the entity’s ongoing major or central operations.
Non-GAAP metrics can provide investors with extra information about the company, and can help communicate what earnings would have been had certain infrequent expenses not occurred during the accounting period. Non-GAAP metrics also creates risks and challenges for investors due its inherent risk given its susceptibility to management bias. Some of the risks include reduced comparability of companies within the same industry and altered investor perception of earnings trends in the market as a whole and for individual companies. The motive behind the increase in non-GAAP earnings is questionable and could be attributed to at least two distinct factors. The first factor is management's desire to provide investors with additional insight into the company, and to help investors identify core profitability by excluding certain infrequent expenses in the calculation of adjusted earnings. The second factor is related to the Internal Revenue Service (IRS) regulations involving executive compensation. According to (Balsam,
My interest for the Attorney Advisor position with the United States Patent & Trademark Office (USPTO) arises from my longstanding commitment to constantly improve myself. I have always enjoyed legal research, writing, and the complexities of intellectual property. I have no doubt that my enthusiasm to research, my eagerness to learn, and my strong ability to communicate clearly, work efficiently, accurately, and quickly, will make me an invaluable asset to the USPTO. I believe these traits combined with my unique skillset, developed as a result of experiences working for the Arizona Diamondbacks of Major League Baseball (Diamondbacks), Nike Inc. (Nike), and the Arizona Attorney General’s Office, Liability Management Department (AG Office)
Any company claiming compliance with GAAP must comply with most standards and interpretations but does not have to follow the disclosure requirements.
To achieve competency in this unit you must complete the following assessment items. All tasks must be submitted together. Tick the boxes to show that each task is attached. Task 1. Marketing Plan Review Task 2. Conduct a Marketing Audit Task 3. Knowledge Test
I am assuming that the student is able to construct basic sentence and grammar structure (past & present tense etc.). If the student is unable to do so, he/she is in no condition to attempt essay writing. Please sign the student for basic language/ grammar classes instead.