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Accounting for the iPhone at Apple Inc Case Solution
Case Solution
In the beginning, Apple was able to identify the income streams that were related to its iPhone itemswith the use of subscription accounting tools. In 2008, however, the firm made available the non-GAAP supplemental figuresthrough which almost the entire income stream was identified immediately. The response of market players to the immediate disclosure was varied. Was Apple going in the right direction in debating that subscription accounting was insufficient and not suitable for the iPhone?
Excel Calculations
Apple Inc. Select Historical Financial Data
1b. Apple Inc. Unaudited Condensed Consolidated Statement of Operations (in millions, except share amounts which are reflected in thousands and per share amounts)
1c. Unaudited Condensed Balance Sheets (in millions, except share amounts)
1d. Unaudited Condensed Consolidated Statements of Cash Flows (in millions)
1e. Unaudited Condensed Schedule of Deferred Revenue (in millions)
1f. Unaudited Reconciliation of Non-GAAP to GAAP Results of Operations
Stock Movement
Profitability Ratios for the last Quarter
Questions Covered
Subscription Accounting
Advantages:
Disadvantages:
Effect of Subscription Accounting on Financial Performance
1: EPS
2: ROA and ROE:
Apple’s Financial Performance in 2008
How could Apple Inc have avoided subscription accounting?
Apple Inc Ratio Analysis
1: Return on Assets:
2: Return on Equity:
3: EPS:
4: Gross Profit Margin:
Why Apple Inc used subscription accounting?