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:

Federally-Sponsored Agency Debt

Securities issued by government-sponsored enterprises to finance activities benefiting the public, with varying degrees of government backing.

Yield Spread

The difference between the yields on varying debt instruments, usually of different credit qualities or maturing at different times.

U.S. Treasuries

Short for United States Treasury securities, which are government debt instruments issued by the U.S. Department of the Treasury to finance government spending.

Brokers' Calls

Short-term loans for brokers to fund their clients' margin accounts, often callable on demand.