Apple Could Receive FASB Approval for Accounting Changes, Remove iPod Touch Upgrade Fees

Posted by:
Date: Friday, September 18th, 2009, 04:34
Category: Finance, News

applelogo1.jpg

If you’ve ever been irked at the small charges you’ve had to pay for an iPod touch software upgrade, this may be about to go by the wayside. According to Ars Technica, a rule governed by the Financial Accounting Standards Board, that’s been heavily lobbied for by Apple and other electronics companies, may be enough to lift the charge that iPod touch owners have had to pay for updates of significant features to their devices. The rule focuses on “subscription accounting”, or devices that gain “significant new functionality” after their sale, like the iPhone, have to be reported over a series of years rather than all at the same time (presumably because the revenues associated with the product were the result of a series of updates, not just one lump sum).

In the case of the iPhone, subscription charges associated with them over two years round out the criteria. The iPod touch is different and because Apple doesn’t want to report the sales of those devices over a period of time, they’ve had to charge minimum fees for updates in the form of the US$10 and other fees that iPod touch owners have paid for the firmware updates. But if the new rule receives FASB approval, then Apple would be able to report sales of the iPod touch all together without having to worry about charging for updates, as well as the dual GAAP and non-GAAP reporting we’ve heard on their conference calls.

Such a chance could also help Apple’s stock price (seeing all of the iPhone’s sales at once would boost investor confidence), and it would help developers who are asking all users of both the iPhone and iPod touch to update right away, as they wouldn’t have to wait until users found the few bucks in question before downloading a large new update.

Recent Posts