Why Was Apple Required to Spread Their IPhone Revenues Over

question 223

Multiple Choice

Why was Apple required to spread their iPhone revenues over a two-year period?

• A)Because of its newness, their returns might exceed the normal level of returns.
• B)Because they were required to provide software updates over that two year period.
• C)Because that was the estimated life of the iPhone.
• D)Because they needed to defer revenue recognition since they had a swap program available for future models.

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Definitions:

First-Quarter Dividend

A dividend payment made by a company to its shareholders, typically announced after the first financial quarter's results.

Balance Sheet

A financial statement that shows a company's assets, liabilities, and shareholders' equity at a specific point in time.

Fixed Assets

Long-term tangible property owned by a business that is used in producing goods and services.

Retained Earnings

The portion of net income that is retained by a company rather than distributed to its shareholders as dividends.