Apple Revenue Recogonition

Concepts
A. Revenue is gross amount a company received or billed from service provided or units sold, Revenue is earned regardless money come in or not at that particular time. It is assumed revenue is earned, when it is realizable, and earned. Revenues are derived from company normal operation. The company exist to sell it is core product or services to the market. Gain rise from non operation activities of the entity. An asset sells can be considered a gain if the company originally depreciated the assets to zero, then sell it.
Even know the company used the assets to generate revenue, the assets transaction is a gain, because it is not a core business transaction. The primary function of a business is not to sell the assets for a gain. Any amount of gain from non operation of core business is considered to be a gain. Examples are currency gain, Short term investment gain, and extraordinary gain.

B. When a business recognized revenue, it means it has earned the revenue, and it is realizable in that period, which indicated a transaction, or service has occurred.
The business did its obligation to bill or accepts money at that period. The business has full expectation it will receive the revenue in the near term depending the billing agreements. The income statement is affected by revenue recognition, also the balance sheet is affected, and all this individuals: Account receivable, Tax payable, COGS, Cash, Unearned revenue. The revenue criteria from FASB concept 5 says: revenue to be recognized on the income statement, revenue must be realized, or realizable and earned.
C. Yes, they do align with FASB standards; Apple recognized revenue when persuasive evidence of transfer ownership arrangement exists.

Entity has transferred to the buyer the significant risks and rewards of ownership of the goods;
Entity retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold
The amount of revenue can be measured reliably;
It is probable that the economic benefits associated with the transaction will flow to the entity.

D. The multiple element contract is referring to the embedded unspecified upgrade right that the company might be obligated to provide. It is difficult to put a monetary value, because the company has to estimate the cost of upgrade, and once they estimate the cost, the company must set deferred revenue by subtracting it from original sales. The new rules allowed the company to estimate as low as possible because the upgrade costs are not that significant to swing the income statement.
E Compensation metric could be aligned with revenue growth.
F. Tunes songs sold online on net basis, and recognized when transaction occurred Mac-branded accessories are recognized when billed, if it sold online apple waits until customers receive the items, because apple is liable until delivery. IPod sold to third party reseller in India is recognized when apple billed the third party.
G. Apple recognized the amount it billed it‘s customers, apple takes inventory risks, therefore it recognized the gross amount it billed, if it sold online from another company, apple only recognized net sales.
H. I under the old model revenue was deferred and recognized each year on straight line basis over its economic life of the product, but under the new model Apple is able to take significant portion of the sale at the time of transaction.
I. Prospective can only apply to future while retrospective can apply to the past transactions. Apple elected to use retrospective.
J. Iincreased its net income IIBalance sheet and Cash Flow statement (operation). Improved gross margin
K. Most of the cost good already occurred before apple was able to recognized revenue. Therefore, Apple must adjust individual account to match its expense, and revenue.
L. Increased operation cash flow
M. Accounting rules, and procedures might be preventing unfair reporting, but it has a major flaws. One of the flows is accounting doesn’t adapt quickly to economic condition. Accounting numbers doesn’t really reflect the true value of a company. Account is lagging indicator. One industry can benefits from particular accounting procedure, and rules, but it can also hurt another industry by not reflecting true economic value. We will like to report to our shareholders actual reflection of our operation, but accounting procedures doesn’t allow us to communicate the actual result.