Apple Case Questions

1. Describe the transaction where the customer acquires an iPhone and explain how Apple must account for it in its financial statements. 2. Explain in your own words what the GAAP versus non-GAAP Numbers mean. What is the potential financial statement impact if that non-GAAP accounting was used? 3. Which set of numbers best reflects the economics of the iPhone? Why? 4. Does it matter if FASB adopts a new rule for revenue recognition related to smartphones? 5. What impact does the purposed new Revenue Recognition rule have for Apples accounting for the iPhone? Does this better reflect the economic reality?