Apple Inc.chose to report recognized sales revenue of i-Phones and i-Pods evenly over the 18 months following the sale on the grounds that the sales contract implies that upgrades and updates of the software will be provided to the customer.The customer essentially paid in advance for services to be rendered.Apple's argument is that a correct application of the matching principle requires that the costs of upgrades and the revenue (perceived in advance as unearned revenue)be recognized in the same period.Apple Inc.' s choice is in conformity with IFRS rules.

Question

Quizplus · Accepted Answer

Under IFRS, revenue recognition for goods and services that are delivered over time can be recognized over the period of the contract if it reflects the transfer of control and benefits to the customer. Apple's approach aligns with the principle that revenue should be recognized when the performance obligations under the contract are satisfied, which, in this case, includes providing software updates and upgrades over the specified period.

Apple IncChose to Report Recognized Sales Revenue of I-Phones and I-Pods