“Accounting rulemakers approved a change Wednesday that will give a boost to technology companies and other firms by allowing them to recognize some revenues faster,” Michael Rapoport reports for Dow Jones Newswires. “The change okayed by the Financial Accounting Standards Board helps companies that sell goods and services in bundles – like smart phones and other high-tech devices combining hardware and software, or home appliances that come with installation and service contracts.”
“Under current accounting rules, companies must often defer large portions of their revenue from such sales – recognizing them gradually over time, instead of immediately when the sale is made. The rule change would give companies more flexibility in crediting more of that revenue to their results upfront,” Rapoport reports.
“Apple Inc. (AAPL) is expected to be one of the major beneficiaries of the change, since it would dramatically change how the company reports revenues from its iPhone. Currently, Apple recognizes iPhone revenue over a two-year period, and said recently that overall revenues and earnings in its latest quarter would have been much higher if it didn’t have to defer revenues for the iPhone and its Apple TV product,” Rapoport reports.
Full article here.