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Standards board changes subscription accounting rules, Apple CPAs drunk with power
We'd heard Apple was pushing the Financial Accounting Standards Board to change the rules by which Cupertino's accountants reported iPhone and Apple TV revenue, and it looks like the effort was successful. The new rules allow Apple (and other companies like Palm) to report revenues on products that bundle hardware and software all at once, instead of parceling out the revenue over time using subscription accounting to enable free software upgrades. For investors, that means Apple's quarterly earnings reports will more accurately reflect the state of the company's cash flow, but we're more interested to find out if this means iPod touch OS updates will be free now, since the previous rationale for charging was that iPod revenue wasn't recorded using subscription accounting. We've got a feeling Apple's all too happy to take your $4.95, but we can hope, right? [Via MacRumors]
Apple pushes to change subscription accounting rules
Apple's pretty famous for using subscription accounting for the iPhone and Apple TV as a way to bend the rules and offer free software updates after purchase -- basically, instead of putting all the money from the sale on the books at once, the company's accountants spread the revenue out over two years, extending the "transaction" to cover upgrades. That's great for iPhone owners, but it's not so great for Apple or its investors, since the company's stock price doesn't always reflect the true amount of iPhone money coming in -- in fact, Apple earnings reports now include a second, unofficial balance sheet that does away with subscription accounting to show off the real numbers. Yeah, it's confusing, but it might finally be about to change, since the Financial Accounting Standards Board just tentatively approved new rules that could allow Apple to do away with subscription accounting and still deliver free updates. That means Apple's quarterly earnings will now feature much larger official revenue and profit figures -- last quarter's official revenue was $8.34 billion, while the unofficial number was $9.74 billion -- the lawyers and accountants will be happy, and we'll still get free iPhone updates. Good deal all around -- except for iPod touch owners, who will still have to pay $9.95 and not get a camera. [Via Yahoo]
Palm's subscription accounting webOS plans revealed, CPAs rejoice
Palm fans hoping webOS gets the same kind of upgrade attention Apple's been lavishing on the iPhone take note: a deck of presentation slides has revealed plans to recognize revenue from webOS products over two years using subscription accounting, so Palm can "periodically provide new software features free or charge" to customers of its "webOS products, including the recently announced Pre." If that didn't make any sense to the non-suits out there, just remember this bit of number magic is why Apple treats iPhone and iPod touch users differently when it comes to updates -- the iPod doesn't get 3.0 for free because Apple doesn't handle the math this way. At any rate, number crunchers and MAC students can head on down to the read link for lots more invigorating stuff.
