A-6 SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS the commission it retain

Question

A-6 SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS the commission it retains from each sale. The Basis of Presentation and Preparation The Company's fiscal year is the $2 or 53-week period that ends gross amount billed to customers that is Company to third-party app developers the last Saturday of September. The Con 2012, 2011 and 2010 ended on September 29, 2012, September 24, 2011, and September 25, 2010, respectively. An additional dated S week is included in the first fiscal quarter approximately every si years to realign fiscal quarters with calendar 2012 spanned 53 weeks, with a 14th week included in the first formance of quarter of 2012. Fiscal years 2011 and 2010 spanned 52 weeks deferred for unspecified and each. Unless otherwise stated, references to particular years or r quarters refer to the Company's fiscal years ended in September hardware and software products. The Compainy and the associated quarters of those fiscal years. cal years s Consoli- The Company records deferred revenue when it recei the realign fiscal quarters with calendar quarters. Fiscal year payments in advance of the delivery of products or services. This includes amounts that have been rights and non-software services that are attac cards redeemable at its retail and online stores, and also sells gift cards redeemable on the iTunes Store for the purchase of digital content and software. The Company re- cords deferred revenue upon the sale of the card, which is Net sales consist primarily of revenue from the sale of hardware, software, digital content and applications PEripherails, and service and support contracts. The Com relieved upon redemption of the card by the customer. Rev- pany recognizes revenue when persuasive evidence of an ferred and recognized over the service covera arrangement exists, delivery has occurred, the sales price is fixed or determinable, and collection is probable. Prod- AppleCare service and support contracts typically inclu uct is considered delivered to the customer once it has extended phone support, repair services, web-based suppo shipped and title and risk of loss have been trans esources and diagnostic tools offered under the Company's to revenue for esti- ferred. For most of the Company's product sales, these The c criteria are met at the time the product is shipped. For onmated commitments related to price protection and other line sales to individuals, for some sales to education cus- tomers in the U.S, and for certain other sales, the Company defers revenue until the customer receives the product because the Company retains a portion of the risk of loss on these sales during transit. The Company recog nizes revenue from the sale of hardware products, soft ware bundled with hardware that is essential to the Company records reductions ing price protection, the Company recognizes revenue net of the estimated amount to be refunded. For the Company's other customer incentive programs, the estimated functionality of the hardware, and third-party digital con- tent sold on the iTunes Store in accordance with general revenue recognition accounting guidance. The Company recognizes revenue in accordance with industry specific these programs is recognized at the later of the date at which the Company has sold the product or the date at which the program is offered. The Company also records reductions to revenue for expected future product returns based on the Company's historical experience. Revenue is recorded net of taxes collected from customers that are re mitted to governmental authorities, with the collected taxes software accounting guidance for the following types of recorded as current liabilities until remitted to the relevant s transactions: (i) standalone sales of software products, () sales of software upgrades and (ii) sales of gOVernment authority software bundled with hardware not essential to the func-ue Recognition for Arrangements with Multiple Deliverables For multi-element arrangements that include For the sale of most third-party products, the Company hardware products containing software essential to the recognizes revenue based on the gross amount billed to cus- tomers because the Company hardware product's functionality, undelivered software ele establishes its own pricing for ments that relate to the hardware product's essential soft such products, retains related inventory risk for physical ware, and undelivered non-software services, th obligor to the customer and as allocates revenue to all deliverables based on their relati sumes the credit risk for amounts billed to its customers. selling prices. In such circumstances, the Company uses s For third-party applications sold through the App Store and hierarchy to determine the selling price to be used for all Mac App Store and certain digital content sold through the cating revenue to deliverables: () vendor-specific objective Tunes Store, the Company does not price of the products and is not the cust evidence of fair value "VSOE"), (ii) third of sellingprice ("TPE"), and (iii) best primary obligor to the Th net basis by recognizing in net sales only the Company sells the deliverable separately and is the ptie

Explanation / Answer

1. No, Apple’s fiscal year doesn’t end on the same date every year. The Company’s fiscal year ends on the last Saturday of September. So the date may vary year to year.

The date is determined as per the last Saturday of September. To realign the fiscal quarter with calendar quarters, the Company adds an additional week in the first quarter every six years.

2. The factors used by the Company to record Allowance for Doubtful accounts are historical experiences, the age of the accounts receivable balances, credit quality of the Company’s customers, current economic conditions and other factors that may affect the customers’ ability to pay.

3. Invetnories are stated at the lower of cost (using FIFO) or market. If the cost of exceeds the market value, then provisions are made currently for the difference between the cost and market value.

4. Property, Plant and Equipment are depreciated on the basis of Straight line method over the estimated useful lives of the assets.

5. For buildings useful life is lesser of 30 years or the remaining life such building.

6. For machinery and equipment useful life is 2-5 years.

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