Apple IncChose to Report Recognized Sales Revenue of I-Phones and I-Pods

question 13

True/False

Apple Inc.chose to report recognized sales revenue of i-Phones and i-Pods evenly over the 18 months following the sale on the grounds that the sales contract implies that upgrades and updates of the software will be provided to the customer.The customer essentially paid in advance for services to be rendered.Apple's argument is that a correct application of the matching principle requires that the costs of upgrades and the revenue (perceived in advance as unearned revenue)be recognized in the same period.Apple Inc.' s choice is in conformity with IFRS rules.

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Definitions:

Net Loss

The situation where a company's expenses exceed its revenues during a specific period, leading to a negative profit.

Long-term Debt

Loans, bonds, or other forms of financing that are repayable over a period longer than one year.

Cash Dividends

These are payments made by a company out of its profits to its shareholders, usually in the form of cash.

Cash Flow

The sum of funds being moved into and out of a company, particularly in relation to its cash flow.