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Accounting Rule Change Helps Polish Apple's Revenue

September 23, 2009

The Financial Accounting Standards Board has approved a rule change by a unanimous vote that will help technology companies like Apple book revenue sooner.

The rule change passed by a 5-0 margin Wednesday. It allows companies to record revenue from sales of products such as smart phones that include both hardware and software. Reports of the possibly impending rule change helped boost Apple’s stock in recent weeks. The rule change won’t go into effect until 2011, but companies will be able to implement it sooner.

That’s likely to happen in the case of both Apple and Palm, which will be among the major beneficiaries, according to Up to now, Apple has been recording revenue from its iPhone and Apple TV products over eight quarters in order to avoid charging customers a fee every time a new upgrade was sent to their phones or TV equipment.

While the rule change isn’t likely to change the total amount of revenue that Apple receives, it will give investors a better idea of how much a company like Apple is making from quarter to quarter. The rule change will also affect appliance makers who sell their goods with installation and service contracts.

All in all, Steve Jobs should be pleased with the new change. Other tech companies that have been backing the accounting rule change include Cisco Systems, Xerox, Dell, IBM and HP, according to The Wall Street Journal. Call it FASB’s economic stimulus package for the tech industry.

Comments (1)
One would think this law is a no brainer when it comes to such a face paced industry. Investors have been able to figure this out, but with this change in rules, it will allow them to get instant comparison.
Posted by vbpoutsourcing | Tuesday, September 29 2009 at 3:31PM ET
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