1) Discuss GAAP vs. non-GAAP numbers and their impact on financial statements. In particular, how the balance sheet, income statement, and statement of cash flows may differ under these two alternative accounting methods?

2) Which method best reflected the economic reality and why? Note: There is no correct answer for this question (you could support either method). You should focus on clearly articulating the pros and cons of these two methods.

3) Does it matter if the revenue recognition rule for smartphone changes? That is, what would happen if the FASB adopted Apples non-GAAP revenue recognition method for iPhone and make it become GAAP?

4) Describe the current revenue recognition principle for iPhone disclosed in the most recent 10-K by Apple. How is the current rule different from the GAAP subscription accounting or the non-GAAP treatment proposed by Apple in the case? What is your opinion about the new revenue recognition principle for iPhone?