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Apple Gets a Bruise by Blaming A $1.99 Fee on Accounting Rules
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Posting Junkie
Join Date: Oct 2005
Location: Houston, TX
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According to Lynn Turner, former chief accountant of the Securities and Exchange Commission, "GAAP [Generally Accepted Accounting Principles] doesn't require you to charge squat."
She adds, "You charge whatever you want. GAAP doesn't even remotely address whether or not you charge for a significant functionality change. GAAP establishes what the proper accounting is, based on what you did or didn't charge for it."
If you have a subscription to the WSJ: Apple Gets a Bruise by Blaming A $1.99 Fee on Accounting Rules
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Posting Junkie
Join Date: Feb 2005
Location: 888500128
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Care to post the relevant argument for those of us who DON'T have a subscription?
Otherwise, just having somebody say "nuh-uh" isn't really much grounds for discussion.
The problem as I understand it is not CHANGING functionality after shipping of a product; it's ADDING to the functionality (or even worse, in this case, delivering functionality that should have/could have been part of the original shipping product) that can be construed as having delayed final and full delivery of the product. That in turn would mean that ALL profits made from that product would have to be accounted for in THIS quarter (and removed from the last), since the product wasn't actually fully delivered until now.
That was precisely the argumentation for charging a nominal fee for the Logic Pro 7.1 upgrade, even though it was primarily a bug-fix release. It added one or two new functions and a software instrument, so they had to charge for it or completely blow their previous-quarter results.
What is Lynn Turner's claim that this isn't so based upon?
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Administrator  Join Date: Jun 2000
Location: California
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Just follow the link. Non-subscribers get the first few paragraphs as a preview.
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Senior User
Join Date: Jul 2002
Location: Arizona Wasteland
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Since I am unable to read the full article, all I have to say is GAPP and SOX are two very different things.
Let me rewrite it for you.
She adds, "You charge whatever you want. Calculus doesn't even remotely address whether or not you charge for a significant functionality change. Calculus establishes what the proper mathematics is, based on what you did or didn't charge for it."
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Dedicated MacNNer
Join Date: Feb 2004
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Why is this news? It's $2. And really, if you were being investigated by the SEC wouldn't you follow everything by the book?
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Clinically Insane
Join Date: Jun 2001
Location: planning a comeback !
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Nah, ask three tax attorneys, and you get five different answers. The Power of US GAPP + SOX.
The whole point is: it's far but clear, and Apple just doesn't need a new scandal. They rather go that route than risking a lot of other trouble. I read somewhere that Apple had to change their whole accounting if they didn't follow this precedent through all the way. The cost of NOT charging the $ 2 would be so much greater, because it required a lot of changes to their accounting practice.
-t
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Mac Elite
Join Date: Nov 2005
Location: Seattle, WA, USA
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It's $2. Seriously, most people spend more money at Starbucks each day. Just pass on a latte one day and you're set. I WISH I could pay $2 to get 802.11n on my MacBook, but unfortunately it's not an option (CD, not C2D). Instead, I'll have to invest in a whole new Airport card when they come out, assuming mine can even be upgraded.
And besides, its not like anyone actually understands GAPP or SOX. It's probably best that Apple is taking this as a precaution to avoid any more legal trouble.
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Any ramblings are entirely my own, and do not represent those of my employers, coworkers, friends, or species
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Ham Sandwich
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Originally Posted by TheoCryst 
It's $2. Seriously, most people spend more money at Starbucks each day. Just pass on a latte one day and you're set. I WISH I could pay $2 to get 802.11n on my MacBook, but unfortunately it's not an option (CD, not C2D). Instead, I'll have to invest in a whole new Airport card when they come out, assuming mine can even be upgraded.
And besides, its not like anyone actually understands GAPP or SOX. It's probably best that Apple is taking this as a precaution to avoid any more legal trouble.
I believe that MacBooks have the Wifi soldered on to the board?
And, what does a pretentious clothing store and baseball team have to do with accounting? Color me lost 
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Posting Junkie
Join Date: Feb 2005
Location: 888500128
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Ham Sandwich
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Originally Posted by analogika
I'll be damned.
Well, you can't easily replace the card with a retail version without voiding any warranties or service plans.
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