Thursday, September 24, 2009
Posted by Jeff Campbell in "Apple News" @ 09:00 AM
"An accounting rule change, approved yesterday, could drive Apple's reported earnings to the moon, and could send stock prices up, too."
FASB, the Financial Accounting Standards Board here in the US, approved an accounting rule change regarding how companies keep track of subscription sales. Previously, when the sale was made, a company had to spread the income out over the period of the subscription. In the case of the iPhone, it was spread over 8 quarters. Now when the sale is made the income can be reported whole and not in sections, which will show true earnings for the specific reporting period. This is also why updates to the program were free for the iPhone but not for the iPod Touch. Will this change once they start using the new accounting rule and they start charging iPhone users for the updates? What are your thoughts?