to time provide Beginning with initial sales of iPad in April 2010, the Company has also indicated it may from time future unspecified software upgrades and features free of charge to iPad customers. The Company's ESP embedded software upgrade right included with the sale of each iPad is Slo. In June 2010, the Come that certain previously sold iPod touch models would receive an upgrade to iOS 4 free of charge and to-time receive future unspecified software upgrades and features free of charge. The Company's ESP embedded software upgrade right included with each iPod touch sold beginning in June 2010 is SS 2010, the Company announ of charge and may from time Note 2 - Retrospective Adoption of New Accounting Principles (excerpts) In September 2009, the Financial Accounting Standards Board ("FASB") amended the accounting standarde to revenue recognition for arrangements with multiple deliverables and arrangements that include software ("new accounting principles"). The new accounting principles permitted prospective or retrospective adoption the Company elected retrospective adoption during the first quarter of 2010. Under the historical accounting principles,
the Company was required to account for sales of both iPhone and Apple TV using subscription accounting because the Company indicated it might from time to time provide future unspecified software upgrades and features for those products free of charge. Under subscription accounting, revenue and associated product cost of sales for iPhone and Apple TV were deferred at the time of sale and recognized on a straight-line basis over each product's estimated economic life. This resulted in the deferral of significant amounts of revenue and cost of sales related to iPhone and Apple TV. The new accounting principles affect the Company's accounting for all past and current sales of iPhone, iPad, Apple TV and for sales of iPod touch beginning in June 2010. The new accounting principles require the Company to account for the sale of these devices as two deliverables. The first deliverable is the hardware and software essential to the functionality of the hardware device delivered at the time of sale, and the second deliverable is the right to receive on a when-and-if available basis, future unspecified software upgrades and features relating to the product's essential software. The new accounting principles result in the recognition of a substantial portion of the revenue and all product costs from the sale of these devices at the time of their sale. Additionally, the Company is required to estimate a standalone selling price for the unspecified software upgrade rights included with the sale of these devices and recognizes that amount ratably over the 24-month estimated life of the related hardware device.
You've reached the end of your free preview.
Want to read all 9 pages?
- Fall '19