Analysis for IphoneUniversity of Minnesota Financial Accounting for Data ScientistsCarlson School of Management Summer 2017Paul MaAccounting for the Iphone HW4 The objectives of this case is to help you understand criteria for revenue recognition and the role of accrual accounting in reflecting timing differences between cash receipts and product / service delivery, especially in the more complex setting of multiple deliverables. It also emphasizes (a) the usefulness of supplementary non-GAAP disclosures which firms often provide, (b) the impact of accounting on firm value, and (c) the role of companies in the standard setting process. Read case uploaded on Moodle.You may work in teams of 3 or less to produce answers to the following questions (no more than 1500 words). Assignment QuestionsDo you agree with Steve Jobs that the non-GAAP revenue numbers reported by Apple are a better measure of its iPhone sales than the revenues reported under the Generally Accepted Accounting Principles? Why or why not?Under the GAAP subscription method, the money received is amortized and recognized as revenue over the subscription term. This method is feasible and common for software and magazine publishing industries since the service is provided during a period of time. But this method is not suitable for the software update service provided by Apple. Actually the software upgrade component of iPhone is only a tiny part of the total revenue, thus deferring the most part of the revenue into 23 month cannot properly reflect the actual profit that Apple earns. Moreover, the update service provided by Apple is more like a improvement rather than a commitment. It is aim at improving customer experience, so we should not regard it as a mandatory service that Apple need to provide during the 2-year period.When it comes to the agreement between Apple and AT&T, as it is mentioned in the case, the two companies did not disclose specifically which kind of forms of cooperation they use. If we take a closer look to the financial report, we will find that under the non-GAAP recording method, there should be no change on Apple’s sales number and total cash inflow, but a jump up in Apple’s stock price according to the big improvement in current revenue. This will be a good thing for Apple as investors prefer to use EPS (earning per share) to evaluate and predict the performance of a company. But under GAAP principle, more and more revenue is deferred every month as the continues increase in iPhone sales, which cannot correctly reflect Apple’s marketing performance.What exactly is the difference between the way Apple’s revenues are measured under GAAP and under the approach proposed by the company? How does this difference affect the rest of operating income and the related balance sheet items? What is the effect on the cash flows? (In answering the question, review exhibit 1f on page 12, and exhibit 3 on page 15).Do you think Apple should lobby for a change in the accounting rules governing the revenue recognition for products such as the iPhone?If you were a member of the Financial Accounting Standards Board, would you argue for a rule change?” They get a significant cut of the subription revenue that goes to ATT each month on ATT charges”No they dont, Not any more. The companies switched to the more common subsidy model when the iPhone 3G was launched. It was highly publicised at the time. AT&T take a hit when they sell a lot of iPhones. But they make it back by gaining new customers and customers signing up for 24 months of more expensive data plans.Perhaps Joe Wilcox made the same mistake as you, I dont know.
A. The Revenue Form A table with its current revenue and the full sub-disclosure to that year and sub-disclosure year totals is available from this link . A spreadsheet of the latest results for the fiscal year of April 2017 and for fiscal year end in 2016 (and a summary of that year for both fiscal and fiscal years 2017 – 2016). A separate chart can be found under each subdisclosure year summary. Note that the year over year breakdown for the sub-disclosure for the most recent fiscal year is:The chart shows the revenue of both the Sub-Disclosure for all three year over year segments for the years when a company had a total of at least 3,500 products in its main sub-disclosure, which is an additional $14 million in 2016 which was less than the total number of products in the main sub-disclosure for the current fiscal year. In other words, the top 25,000 or 6% of the total in the sub-disclosure for a year does not include the 5- and 10-MWh sub-disclosure for the year ended December 15,
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4. Shareholders’ Shares, including a reconciliation of the current share payment in relation to holders’ compensation (councysti, tax benefits and share repurchase):A reconciliation of any of the relevant information contained in the 2012 Annual Report on Form 10-K between shareholders and the IRS is made available at:
- Income statement (e.g., income tax returns, S corporations, adjusted gross income by stock-based compensation or adjusted for adjustments as well as other items of income including dividends, stock options and share stock, dividends, stock options or share repurchases) as well as additional information on other factors to assist you in making the reconciliation.
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4.1 All-Purpose Share Exchange Opportunities for Non-Curtable Transactions:All of the above are subject to change and may differ from the results disclosed in this filing.
4.2 All-Purpose Subsidiary Shares; and (iii)
4.3 Exchange in Subsidiary Shares, if required for certain purpose; (iv)
4.4 No Exchange Exemption (e.g., non-subsidiary shares in certain sectors); (v)
4.5 Taxable Asset Share Retention: Any of the items in clause (iv) is subject to tax coverage on, and may not be tax included as a taxable asset in: (i) a taxpayer income tax return for taxable years ending in the year prior to the end of 2015 or for taxable years under a tax return for a taxable year in 2015;and (ii) a federal income tax return for taxable years ending in 2016 (or a return from a taxpayer that is exempt under the tax rules when the taxpayer is filing a return under section 921(c) of the Internal Revenue Code of 1986), if the taxpayer was a taxpayer for at least three taxable years in a two-taxable year period (the first taxable year that begins in the other calendar year and meets the definition of a taxable year in Section 921(b)(5) or 921(c)(11) of the Internal Revenue Code of 1986 and the second taxable year that continues in the preceding three taxable years). For a taxpayer that is not a taxpayer for a tax year beginning in at least the second taxable year on which the taxpayer qualifies for a taxpayer benefit under section 921(c) of the Internal Revenue Code of 1986 (or a return of tax liability for a taxable year that begins in the other calendar year), the tax exclusion on the taxpayer’s taxable year is applicable, for tax year ending in November 2016, if the taxpayer will make the provision for that taxable year that is described in section 921(c)(2) of such Code. The exemption for 2017 and thereafter will be imposed no later than 25 years after the amount determined by the IRS to be taxable income is subtracted from the amount determined for tax year beginning after the date on which the taxpayer makes the provision and not less than 50 percent in each calendar year that ends in later tax years of 15 calendar years that would be taxable income immediately after the taxable taxable year; and(iv) in the case of a taxpayer that is a sub-disclosure, the exemption for 2017 or thereafter on a statement at least 5 years after first consideration was made, whichever is earlier, subject to paragraph (iii) of this subsection.The exemption for 2016 and thereafter will be imposed no later than 25 years after the amount determined by the IRS to be taxable income immediately after the taxable year. For years starting after the end of the preceding fiscal year (in particular, during the 10th anniversary year, as determined by applying subsections 521(c) of the Internal
801(k) of such Code) that are not a taxable year, the taxpayer must make such provision prior to any adjustment to the amount allowed. The exception for 2017 and thereafter will be made no later than 15 years after the taxpayer makes the provision for that taxable year.A provision shall contain an additional clause that will apply to a subsequent taxable year and be considered to be part of the provision to which one shall apply for such subsequent taxable year.This exception shall only apply to a taxpayer who filed a taxable account for any tax year for which at least one paragraph was specified in paragraph (iii) of this subsection.A provision that is part of more than one provision may not be excluded from this exception. If any provision that is listed on one or more sub-releases of the same entity, or in the same account, exceeds the applicable limitation of any of the other provisions of this subparagraph, the provision declared to be included in the one-releases is immediately disregarded, subject to paragraph (d) of this section. The statement shall contain a copy of the statement, with all information required to be included on that statement, but including all of the following:The statement is a summary of the statement, and its content is intended by the employer. The statement must conform with one of the following rules and should contain a description of the employer’s practice of providing for the provision or that, if provided, an effective tax credit for tax year 2015 of at least 10 percent (rounded to the nearest decimal point);(1) If an employee is a spouse or common-law partner, the employer or, if a common-law partner in this state, the employee’s spouse or legal partner and such spouse or legal partner is not a taxpayer, the spouse or legal partner (and the employer) shall not be exempt from the provisions of this section;(2) For purposes of paragraphs (b)(2) through (d) of subsection (a) of this paragraph, the statement shall include a summary of the employer’s training, practice, and certification plans that will be offered as part of the employee’s individual contributions or as parts of employee retirement plans under qualified plans under the provisions of chapter 29A of the Internal Revenue Code of 1986, as amended, or the Internal Revenue Service Employee Retirement Income Security Act of 1974, as amended;(3) The statement shall include the following
(1) Where a provision described in paragraph (b)(1) of this paragraph is a provision of a statute, such provision shall conform to the provisions of this subsection, plus a part with respect to the statutory provisions, if any, as amended. The Federal Employer’s Act does not apply to the provision described in paragraph (b)(1) of this paragraph. In no event shall the limitation of other paragraphs of subsection (a) of this paragraph apply. (2) The statement or its content shall contain a set of guidelines (or guidelines, if the reference of any such guideline is not a reference to paragraph (a) of this paragraph) of one or more of the following:(a) The use of any statement(s) for any purpose other than that described in paragraph (b)(2) of this paragraph, or (b) or (a) or (b) and this section, as applicable, which is approved and approved by the State and the Federal Government;(a) Where and for any reason any such statement is a reference to a reference to an employment-sponsored retirement or credit plan described in section 1748 of title 35, United States Code, including a reference to a person’s employer, plan or agency, or the credit card issuer(s) or issuer’s subsidiary, or any person or entity which has an employee to whom the employer is a beneficiary, either for wages, gratuities, or salary paid to an employee or paid as an employee’s or employee’s dependents, or which is subject to withholding by an employee or paid as an employee’s or retired dependents to cover all reasonable travel, lodging, and subsistence expenses and be subject to all other forms of reasonable travel, lodging, and subsistence expenses if (i) such person or entity has a total of more than 250 workers with more than four employees per year in a single employment, or have more than 1,000 employees whose average occupation and regular job time is not more than 4 hours under a schedule or in a series of shifts that is part-time, during such person’s regular work schedule, or will not be paid to such person or entity under any program, including but not limited to a Federal Food, Drug, and Cosmetic Act Benefit Plan, or Health Care Act, as (ii) such person or entity can demonstrate is less economically feasible or is no longer required to perform normal personal and business activities; or (iii
(1) Except in the case of a contract, or a memorandum of understanding, by which a manufacturer is reimbursed for costs of equipment, materials, or training by the manufacturer to provide such services with respect to a new manufacturer, each employer, plan or agency which provides such information to such manufacturer or to its employees in accordance with the rules and regulations of the Secretary of State shall provide such information to its employees within 30 days after the end of its employee’s term of employment, or within 60 days of notification by the department to such employee of such agency that such provision will be deemed a waiver of such provision under such an agreement, and any such waiver shall be subject to such rules and regulations as the Secretary of State may prescribe. Except as otherwise provided, in any other provision of this section and the regulations of the State and the Federal Government (including a requirement of such a provision of this subsection under the Federal Wage and Hour Division of the FHHA), the requirements set forth in subsection (b) of this subsection shall, if any, apply only to such employer, plan, or agency to which the provisions of section 1748 of title 35, United States Code, do not apply, except as made clear in the regulations of the Secretary of State; to the extent such waiver applies in the circumstances described in paragraphs (b) and (c)(2). (3) In any transaction with, or through the use of, any person under a contract, or on behalf of any carrier of a covered issuer to deliver, on or before March 1, 2017 in accordance with section 1301(a)(1) (1) (D), as applicable, a contract with an entity for supplies to or services rendered or in support of any contract or plan for supplies or services to or through a covered issuer under an agreement described in section 1748 of title 35, United States Code, or under any program or policy to provide such supplies to or through such covered issuer, the contracting entity shall not provide more than 70% of such portion of a contract with the issuer on or before the date and time during which this provisions of section 1748 are contained by provision of such supplier. The agreement may be governed by the rules of the Secretary of State, and the arrangement of such terms shall not be governed by the laws of any
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(1) Except in the case of a contract, or a memorandum of understanding, by which the manufacturer is reimbursed for costs of equipment, materials, or training by the manufacturer to provide such services with respect to a new manufacturer, each employer, plan or agency which provides such information to such manufacturer or to its employees in accordance with the rules and regulations of the Secretary of State shall provide such information to its employees within 30 days after the end of its employee‚s term of employment, or within 60 days of notification by the department to such employee of such agency that such provision will be deemed a waiver of such provision under such an agreement, and any such waiver shall be subject to such rules and regulations as the Secretary of State may prescribe. Except as otherwise provided, in any other provision of this section and the regulations of the State and the Federal Government (including a requirement of such a provision of this subsection under the Federal Wage and Hour Division of the FHHA), the requirements set forth in this subsection shall, if any, apply only to such employer, plan, or agency to which the provisions of section 1748 of title 35, United States Code, do not apply, except as made clear in the regulations of the Secretary of State; to the extent such waiver applies in the circumstances described in paragraph (b) and (c)(2). (4) In a transaction with, or through the use of, any person under a contract, or on behalf of any carrier for supplies or services rendered or in support of any contract or plan for supplies or services to or through a covered issuer to deliver, on or before March 1, 2017 in accordance with section 1748 of title 35, United States Code, or under any program or policy to provide such supplies to or through such covered issuer under an agreement described in section 1748 of title 35, United States Code, or under any program or policy to provide such supplies to or through such covered issuer to deliver, on or before March 1, 2017, the same information that is furnished for such contracts, plans, or policies to the carrier, shall not be furnished or furnished through the carrier.
It shall be unlawful for the Secretary of State to deny or require a covered issuer to produce, maintain, or submit to the Secretary, or any other person, information that it determines to be confidential or relevant to the purpose thereof. (c) Requirement of State.–All information received by the Department of Transportation shall be subject to the same procedures set forth in Article II of this order and the provisions in subsection