Accounting for the IPhone Essay

1. Comp are the GAAP and Non-GAAP info and discuss their mend on the financial statements. In comparing data, when apple reported its Q4 FY 2008 financial results on October 21, 2008, it reported both GAAP and Non-GAAP economic data. infra GAAP, Apple reported quarterly revenue of $7.9 billion and win proceeds of $1.1 billion. Under Non-GAAP, revenues amounted to $11.7 billion and net profit totaled $2.4 billion. The difference surrounded by GAAP and Non-GAAP revenues and net profit were $3.8 billion and $1.3 billion respectively. Needless to say, much(prenominal) a large difference will have a huge impact on the income statement and balance sheet. Both financial statements would be greatly understated. Apple reported both GAAP and Non-GAAP financial data because of this large difference and they felt that the GAAP data did not flop portray Apples financial statements.2. Which method best ponders the economic reality?I believe both GAAP and Non-GAAP accurately reflect App les economic reality. Each method just apparently presents Apples financial data in a varied way. Under GAAP, revenue from iPhone is deferred and is recognized on a straight declension basis over a 24 month period. This type of subscription accounting system is required because Apple chose to give future, unembellished software upgrades with the iPhone. GAAP requires this to keep on companies from trying to over-inflate revenues by increasing sales with the promise of a free incentive in the future then not delivering on the promise. await more Sleep Deprivation Problem Solution Speech bear witnessUnder GAAP, the huge increase in iPhone sales is represented in the deferred revenue accounts and the cash from operating activities on the statement of cash flows. Apples non-GAAP statements recognize revenue from iPhone sales immediately, instead of in a deferred account, and is represented by the increase in revenue and net profit. To investors, the non-GAAP statements are more i mpressive because of the large increase in revenue and net profit. However, the truth of the matter is that both methods present the same information scarcely in different accounts and at different times.