Join Jim Stice for an in-depth discussion in this video Buying an iPhone, part of Running a Profitable Business: Revenue Recognition.
- You've seen the cell phones that I've used…over the years?…- I have, some of them look like World War II…walkie talkies.…- Yeah, very funny.…Well my son has been trying to ease me…into modern society so he helped me…buy an iPhone.…- Hey, congratulations!…On behalf of the rest of humanity,…let me welcome you to the 21st century. - Oh, thank you very much.…Thank you.…Now, you may not know that there are…some interesting revenue recognition issues…associated with iPhones.…- Well, it seems pretty straight forward to me.…You pay money, and Apple gives you an iPhone.…- Aah, well let me explain.…
When Apple sells a person an iPhone,…Apple is actually selling a bundle…of three different things.…- Three things?…- Yeah, first there's the iPhone itself,…which is a functioning package…of hardware and software.…- Number one, the iPhone.…- Second, with respect to iPhone sales,…Apple states that it may, from time to time,…provide future unspecified software upgrades…and features free of charge to customers.…- Okay, when you buy an iPhone…
But without recognizing revenue, a company can't hope to report any profit. Accordingly, company management is typically under great pressure to recognize revenue as soon as possible. Want to understand these concepts better? Join professors Jim and Kay Stice as they introduce the theory, practice, and implications of revenue recognition. Together they demonstrate how this seemingly innocent accounting topic can turn a reported profit into a reported loss, sometimes with multibillion dollar implications for company values.
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- Defining revenue recognition
- Timing revenue recognition
- Understanding multi-element transactions
- Valuing companies
- Reviewing the great revenue frauds and scandals of history