Quotable: Beschizza on $20 iPod Touch Levy

"We need a new word for things that people assume are necessary because of Sarbanes-Oxley: Oxshit." $20 iPod Touch Upgrade Not Playing Well With Fans [Gadget Lab]
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One Response to Quotable: Beschizza on $20 iPod Touch Levy

  1. Brian Carnell says:

    You know, there’s this thing called Google…

    Anyway, this doesn’t have anything to do with Sarbanes-Oxley but rather with standard accounting practices, specifically SOP 97-2 which covers revenue recognition from software. As AIPCA notes here (http://www.aicpa.org/PUBS/JOFA/dec2007/software_revenue.htm), under SOP 97-2, if Apple offers free upgrades it has to alter how it recognizes revenue from sales (which it did with the iPhone):

    Apple has disclosed in quarterly filings that it recognizes revenue from its new iPhone as well as the iPod and Macintosh computers under software revenue recognition rules. Apple will record all revenue and related costs of sales from the iPhone on a straight-line basis over the two-year estimated life of this product. Historically, many hardware companies might have recognized revenue upfront, at the time of the sale, from a product similar to an iPhone. However, Apple intends to provide iPhone users with free software upgrades, necessitating the deferral of revenue under SOP 97-2.

    With the iPod touch and the previous brouhaha over the upgrade to the Apple wifi box, it is almost certainly recognizing the revenue upfront, which requires it to charge for any significant upgrades.

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