Share
Explore BrainMass

Ethics and Ahead of the Accounting Curve

Here is an interesting article on revenue recognition and how new pronouncements can affect the numbers.

http://www.cfo.com/article.cfm/14485618

The actions taken by Apple are consistent with revenue recognition rules, but are their financial results skewed? Do these new rules make financial reporting more transparent? Are any ethical challenges present?

Leone, M. 2010. Ahead of the accounting curve, too. CFO Magazine. March 25, 2010. Retrieved April 1, 2012 frm http://www.cfo.com/article.cfm/14485618/1/c_2984368

Solution Preview

The actions taken by Apple are consistent with revenue recognition rules, but are their financial results skewed?

Yes, the results are "skewed" by fast-forwarding revenue. Under the former rules, the sales from technology products were spread over the service period, on a subscription basis, because some services such as upgrades and new apps were not delivered at delivery of the hardware. Under the new rules, the revenue can be recognized proportionate to the value delivered, not over a time period. Rather than just applying the new rules going forward, Apple went backwards ...

Solution Summary

Your tutorial is 341 plus a reference (the article discussed).

$2.19