Taking a look at Apple’s 10k—the world’s largest company by market capitalization—helps users of financial statements understand how revenue recognition, and other accounting standard updates may affect a company. Additionally, it gives a glimpse into how Apple collects its massive cash hoard.
Apple footnotes that the new revenue recognition standards “the Company must adopt [include] ASU 2016-08, ASU 2016-10, and ASU 2016-12 with ASU 2014-09 (collectively, the new revenue standards)” and “will be effective for the company in its first quarter of 2019.”
ASU 2014-09: Revenue from Contracts with Customers
ASU 2016-08: Principal versus Agent Considerations
ASU 2016-10: Identifying Performance Obligations and Licensing
ASU 2016-12: Narrow-Scope Improvements and Practical Expedients
No Material Impact Expected
Revenue consists of sales of hardware, software, apps, accessories, digital content, services and support contracts, which collectively brought in $216 billion of revenue. Changes to revenue recognition would be an area of great focus for the Cupertino giant. The fact it has addressed, and sorted through the accounting standard updates in its footnotes years in advance underscores its importance. Despite its compliance relevance, Apple “does not expect the adoption of the new revenue standards to have a material impact on its consolidated financial statements.”
An article on investors.com Why Everyone from AT&T to Disney and Microsoft is Bracing for the Revenue Rule states that “FASB 606 will make revenue recognition consistent across U.S. industries. Guidelines specific to the software and defense industries, for example, are going away.”
Apple’s 10K speaks to how it accounts for “multi-element arrangements” based on “industry specific software accounting guidance.” Luca Maestri, CFO of Apple in conjunction with the Board of Directors and Audit Committee will have the task of guiding their accounting and finance teams to full compliance with the new standard. Changes must be made and users of financial statements will track incremental changes, material or not.
Continue the discussion at Bloomberg BNA Accounting LinkedIn.
Apple's 10k fiscal year ended September 30, 2016
Why Everyone from AT&T to Disney and Microsoft is Bracing for Revenue Rule: by Reinhardt Krause,
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)