From SEC.gov, find and read Apples the financial statements and pages 50-53, notes to the financial statements for the fiscal year ended on September 25, 2010. Write a written report to answer the following questions.

1. Refer to Apples revenue recognition footnote. In particular, when does the company recognize revenue for the following types of sales? A) iTunes songs sold online. B) Mac-branded accessories such as headphones, power adaptors in the Apple stores. What if the accessories are sold online? C) iPods sold to a third-party reseller in India.
2. Refer to Apples revenue recognition footnote. Consider the sale of peripheral products obtained from other companies, such as Logitech speakers. How would Apple determine the amount to record for such speakers sold from the Apple stores? What if the speakers were drop-shipped from Logitech for an online Apple-store order?
3. Consider the following hypothetical sales scenario. A large community college buys and takes delivery of 50 iMac computers from a local Apple store. The invoiced price is $2,800 per unit and includes hardware, software essential to the functionality of the hardware, third-party software including Microsoft Office for Mac and Adobe Creative Suite, and two years of tech service and support. Apple uses vendor-specific objective evidence to determined unit prices of $2,500 and $300 for hardware and the essential software, respectively. The third-[arty software typically retails for $500 (but Apple purchases it at a 50% discount) and equivalent service and support contracts are $100 per year. The customer (the community college) can opt to purchase subsequent essential software and OS upgrades. Indicate how Apple should record gross revenue for the transaction at the time the customer takes delivery of the computers. Your response should include specific dollar amounts.
4. Apple adopted a new accounting principle for revenue recognition for sales of certain products including iPhones. A) explain in your own words how Apple recognized revenue of iPhones before and after the change in accounting principle; B) What is the difference between applying a new accounting principle retrospectively and prospectively? Which did Apple do?
5. A) What effect did the retrospective application of the new accounting principle have on Apples fiscal 2009 net income? B) For each income statement item adjusted, explain why the adjustment was necessary; C) Did the new revenue recognition principle improve or weaken the companys gross margin for fiscal 2009?
6. For each balance sheet item adjusted, explain why the adjustment was necessary. Hint: Other current assets and other assets include the pro rta cost of products (such as the iPhone) that were sold but for which revenue was deferred. Accrued expenses and other non-current liabilities include current and non-current portion of warranty accruals, respectively.
7. What was the cash flow effect of the new revenue recognition principle?
8. Prior to the FASBs announcement of the new revenue recognition rules, there were suggestions in the business press that some companies including Apple, actively lobbied for the new standard to opportunistically increase profits. Do you agree or disagree?