Accounting rule change approved by FASB
After a preliminary agreement last week the Financial Accounting Standards Board made it official Wednesday, accepting proposed changes to how companies recognize revenue.
With a change in accounting rules, we'll soon have a more accurate picture of the iPhone's success.
(Credit: James Martin/CNET)The change will be of particular interest to companies like Apple, which has stuck to a rather bewildering accounting practice of recognizing revenue from sales of the iPhone and Apple TV over a period of two years, or eight financial quarters. The practice was put in place on those two products to avoid charging a fee for every product upgrade--something Apple was told it would need to satisfy accounting regulations that require companies to establish a value for product upgrades.
The new rule won't change the amount of revenue coming into corporate coffers, but it will allow investors to have a more accurate picture of how much money companies are making every quarter. Apple is a company that many point to as benefiting from this rule change because of the enormous popularity of the iPhone.
Erica Ogg is a CNET News reporter who covers Apple, HP, Dell, and other PC makers, as well as the consumer electronics industry. She's also one of the hosts of CNET News' Daily Podcast. In her non-work life, she's a history geek, a loyal Dodgers fan, and a mac-and-cheese connoisseur. E-mail Erica. 
If Apple still follows their old practice of charging for OS updates on the Touch, then they will have no legal or business reason requiring them to do so as they have claimed in the past.
Apple- it's up to you next. What will you do with the next iPhone OS?
As for the Touch OS, I do not recall Apple giving a specific reason with regards to the cost. Apple just charges. What is wrong with charging a few dollars for a major release of the OS for Touch? There is no subscription revenue coming in, it is just like you buy a PC or a Mac and you have to pay Apple or Microsoft for new version of an OS.
Why do so many want everything to be free? A new release of an OS requires tens or hundreds of people to work on it and that is many thousands of man-hours and the company has to pay for each man-hour. Do businesses exist to provide everything free for consumers? When did this silliness begin?
- by September 23, 2009 4:36 PM PDT
- As a substantial stockholder, I applaude this decision as well.
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