2.0.0.10falseSummary of Significant Accounting Policies107 - Disclosure - Summary of Significant Accounting Policiestruefalsefalsefalse1usd$falsefalseiso4217_USDStandardhttp://www.xbrl.org/2003/iso4217USDiso42170iso4217_USD_per_sharesDividehttp://www.xbrl.org/2003/iso4217USDiso4217http://www.xbrl.org/2003/instanceshares0sharesStandardhttp://www.xbrl.org/2003/instanceshares053us-gaap_SignificantAccountingPoliciesTextBlockus-gaaptruenadurationstringNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalsefalse00<div>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="center"></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>Note 1 – Summary
of Significant Accounting Policies</b></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px" align="justify">
<font style="FONT-FAMILY: Times New Roman" size="2">Apple Inc. and
its wholly-owned subsidiaries (collectively “Apple” or
the “Company”) design, manufacture, and market personal
computers, mobile communication devices, and portable digital music
and video players and sell a variety of related software, services,
peripherals, networking solutions, and third-party digital content
and applications. The Company sells its products worldwide through
its online stores, its retail stores, its direct sales force, and
third-party wholesalers, resellers and value-added resellers. In
addition, the Company sells a variety of third-party Macintosh
(“Mac”), iPhone, iPad and iPod compatible products
including application software, printers, storage devices,
speakers, headphones, and various other accessories and supplies
through its online and retail stores. The Company sells to
consumer, small and mid-sized business, education, enterprise,
government and creative customers.</font></p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>Basis of Presentation
and Preparation</b></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px" align="justify">
<font style="FONT-FAMILY: Times New Roman" size="2">The
accompanying condensed consolidated financial statements include
the accounts of the Company. Intercompany accounts and transactions
have been eliminated. The preparation of these condensed
consolidated financial statements in conformity with U.S. generally
accepted accounting principles (“GAAP”) requires
management to make estimates and assumptions that affect the
amounts reported in these condensed consolidated financial
statements and accompanying notes. Actual results could differ
materially from those estimates. Certain prior year amounts in the
condensed consolidated financial statements and notes thereto have
been reclassified to conform to the current period’s
presentation.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font style="FONT-FAMILY: Times New Roman" size="2">These condensed
consolidated financial statements and accompanying notes should be
read in conjunction with the Company’s annual consolidated
financial statements and the notes thereto for the fiscal year
ended September 26, 2009, included in its Annual Report on
Form 10-K, as amended (the “2009 Form 10-K”). Unless
otherwise stated, references to particular years or quarters refer
to the Company’s fiscal years ended in September and the
associated quarters of those fiscal years.</font></p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2"><i>Retrospective Adoption
of New Accounting Principles</i></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px" align="justify">
<font style="FONT-FAMILY: Times New Roman" size="2">In September
2009, the Financial Accounting Standards Board (“FASB”)
amended the accounting standards related to revenue recognition for
arrangements with multiple deliverables and arrangements that
include software elements (“new accounting
principles”). The new accounting principles permit
prospective or retrospective adoption, and the Company elected
retrospective adoption during the first quarter of 2010.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font style="FONT-FAMILY: Times New Roman" size="2">Under the
historical accounting principles, the Company was required to
account for sales of both iPhone and Apple TV using subscription
accounting because the Company indicated it might from time-to-time
provide future unspecified software upgrades and features for those
products free of charge. Under subscription accounting, revenue and
associated product cost of sales for iPhone and Apple TV were
deferred at the time of sale and recognized on a straight-line
basis over each product’s estimated economic life. This
resulted in the deferral of significant amounts of revenue and cost
of sales related to iPhone and Apple TV.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font style="FONT-FAMILY: Times New Roman" size="2">The new
accounting principles generally require the Company to account for
the sale of both iPhone and Apple TV as two deliverables. The first
deliverable is the hardware and software essential to the
functionality of the hardware device delivered at the time of sale,
and the second deliverable is the right included with the purchase
of iPhone and Apple TV to receive on a when-and-if-available basis
future unspecified software upgrades and features relating to the
product’s essential software. The new accounting principles
result in the recognition of substantially all of the revenue and
product costs from the sales of iPhone and Apple TV at the time of
sale. Additionally, the Company is required to estimate a
standalone selling price for the unspecified software upgrade
rights included with the sale of iPhone and Apple TV and recognizes
that amount ratably over the 24-month estimated life of the related
hardware device.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font style="FONT-FAMILY: Times New Roman" size="2">The Company had
the option of adopting the new accounting principles on a
prospective or retrospective basis. Prospective adoption would have
required the Company to apply the new accounting principles to
sales beginning in fiscal year 2010 without reflecting the impact
of the new accounting principles on iPhone and Apple TV sales made
prior to September 2009. Accordingly, the Company’s financial
results for the two years following adoption would have included
the impact of amortizing the significant amounts of deferred
revenue and cost of sales related to historical iPhone and Apple TV
sales. The Company believes prospective adoption would have
resulted in financial information that was not comparable between
financial periods because of the significant amount of past iPhone
sales; therefore, the Company elected retrospective adoption.
Retrospective adoption required the Company to revise its
previously issued financial statements as if the new accounting
principles had always been applied. The Company believes
retrospective adoption provides the most comparable and useful
financial information for financial statement users, is more
consistent with the information the Company’s management uses
to evaluate its business, and better reflects the underlying
economic performance of the Company.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font style="FONT-FAMILY: Times New Roman" size="2">Refer to the
“Explanatory Note” and Note 2, “Retrospective
Adoption of New Accounting Principles” in the 2009 Form 10-K
for additional information on the impact of adoption.</font></p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>Earnings Per Common
Share</b></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px" align="justify">
<font style="FONT-FAMILY: Times New Roman" size="2">Basic earnings
per common share is computed by dividing income available to common
shareholders by the weighted-average number of shares of common
stock outstanding during the period. Diluted earnings per common
share is computed by dividing income available to common
shareholders by the weighted-average number of shares of common
stock outstanding during the period increased to include the number
of additional shares of common stock that would have been
outstanding if the potentially dilutive securities had been issued.
Potentially dilutive securities include outstanding options, shares
to be purchased under the employee stock purchase plan, and
unvested restricted stock units (“RSUs”). The dilutive
effect of potentially dilutive securities is reflected in diluted
earnings per common share by application of the treasury stock
method. Under the treasury stock method, an increase in the fair
market value of the Company’s common stock can result in a
greater dilutive effect from potentially dilutive
securities.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font style="FONT-FAMILY: Times New Roman" size="2">The following
table sets forth the computation of basic and diluted earnings per
common share for the three- and six-month periods ended
March 27, 2010 and March 28, 2009 (in thousands, except
net income in millions and per share amounts):</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; FONT-SIZE: 12px">
 </p>
<table border="0" cellspacing="0" cellpadding="0" width="92%" align="center">
<tr>
<td width="64%"></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="5" align="center"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Three Months
Ended</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="5" align="center"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Six Months
Ended</b></font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: Times New Roman" size="1"><b>March 27,<br />
2010</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: Times New Roman" size="1"><b>March 28,<br />
2009</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: Times New Roman" size="1"><b>March 27,<br />
2010</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: Times New Roman" size="1"><b>March 28,<br />
2009</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; MARGIN-LEFT: 1em"><font style="FONT-FAMILY: Times New Roman" size="2">Numerator:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -1em; MARGIN-LEFT: 3em"><font style="FONT-FAMILY: Times New Roman" size="2">Net income</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">3,074</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">1,620</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">6,452</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">3,875</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; MARGIN-LEFT: 1em"><font style="FONT-FAMILY: Times New Roman" size="2">Denominator:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -1em; MARGIN-LEFT: 3em"><font style="FONT-FAMILY: Times New Roman" size="2">Weighted-average shares
outstanding</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">907,548</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">891,180</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">905,545</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">890,161</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; MARGIN-LEFT: 3em"><font style="FONT-FAMILY: Times New Roman" size="2">Effect of dilutive
securities</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">15,330</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">11,813</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">15,786</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">12,082</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -1em; MARGIN-LEFT: 3em"><font style="FONT-FAMILY: Times New Roman" size="2">Weighted-average shares
diluted</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">922,878</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">902,993</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">921,331</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">902,243</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<tr>
<td height="5"></td>
<td height="5" colspan="3"></td>
<td height="5" colspan="3"></td>
<td height="5" colspan="3"></td>
<td height="5" colspan="3"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; MARGIN-LEFT: 1em"><font style="FONT-FAMILY: Times New Roman" size="2">Basic earnings per common
share</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">3.39</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">1.82</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">7.12</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">4.35</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -1em; MARGIN-LEFT: 1em"><font style="FONT-FAMILY: Times New Roman" size="2">Diluted earnings per common
share</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">3.33</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">1.79</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">7.00</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">4.29</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
</table>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font style="FONT-FAMILY: Times New Roman" size="2">Potentially
dilutive securities representing approximately 1.3 million and
19.2 million shares of common stock for the three months ended
March 27, 2010 and March 28, 2009, respectively, and
0.8 million and 18.0 million shares of common stock for
the six months ended March 27, 2010 and March 28, 2009,
respectively, were excluded from the computation of diluted
earnings per common share for these periods because their effect
would have been antidilutive.</font></p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>Revenue
Recognition</b></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px" align="justify">
<font style="FONT-FAMILY: Times New Roman" size="2">Net sales
consist primarily of revenue from the sale of hardware, software,
digital content and applications, peripherals, and service and
support contracts. The Company recognizes revenue when persuasive
evidence of an arrangement exists, delivery has occurred, the sales
price is fixed or determinable, and collection is probable. Product
is considered delivered to the customer once it has been shipped
and title and risk of loss have been transferred. For most of the
Company’s product sales, these criteria are met at the time
the product is shipped. For online sales to individuals, for some
sales to education customers in the U.S., and for certain other
sales, the Company defers revenue until the customer receives the
product because the Company legally retains a portion of the risk
of loss on these sales during transit. The Company recognizes
revenue from the sale of hardware products (e.g., Mac computers,
iPhones, iPods and peripherals), software bundled with hardware
that is essential to the functionality of the hardware, and
third-party digital content sold on the iTunes Store in accordance
with general revenue recognition accounting guidance. The Company
recognizes revenue in accordance with industry specific software
accounting guidance for the following types of sales transactions:
(i) standalone sales of software products, (ii) sales of
software upgrades and (iii) sales of software bundled with
hardware not essential to the functionality of the
hardware.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font style="FONT-FAMILY: Times New Roman" size="2">Revenue from
service and support contracts is deferred and recognized ratably
over the service coverage periods. These contracts typically
include extended phone support, repair services, web-based support
resources, diagnostic tools, and extend the service coverage
offered under the Company’s standard limited
warranty.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font style="FONT-FAMILY: Times New Roman" size="2">The Company
sells software and peripheral products obtained from other
companies. The Company generally establishes its own pricing and
retains related inventory risk, is the primary obligor in sales
transactions with its customers, and assumes the credit risk for
amounts billed to its customers. Accordingly, the Company generally
recognizes revenue for the sale of products obtained from other
companies based on the gross amount billed.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font style="FONT-FAMILY: Times New Roman" size="2">The Company
records reductions to revenue for estimated commitments related to
price protection and for customer incentive programs, including
reseller and end-user rebates, and other sales programs and
volume-based incentives. The estimated cost of these programs is
accrued as a reduction to revenue in the period the Company has
sold the product and committed to a plan. 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 remitted to governmental
authorities, with the collected taxes recorded as current
liabilities until remitted to the relevant government
authority.</font></p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2"><i>Revenue Recognition for
Arrangements with Multiple Deliverables</i></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px" align="justify">
<font style="FONT-FAMILY: Times New Roman" size="2">For
multi-element arrangements that include tangible products that
contain software that is essential to the tangible product’s
functionality and undelivered software elements that relate to the
tangible product’s essential software, the Company allocates
revenue to all deliverables based on their relative selling prices.
In such circumstances, the new accounting principles establish a
hierarchy to determine the selling price to be used for allocating
revenue to deliverables as follows: (i) vendor-specific
objective evidence of fair value (“VSOE”),
(ii) third-party evidence of selling price
(“TPE”), and (iii) best estimate of the selling
price (“ESP”). VSOE generally exists only when the
Company sells the deliverable separately and is the price actually
charged by the Company for that deliverable. ESPs reflect the
Company’s best estimates of what the selling prices of
elements would be if they were sold regularly on a stand-alone
basis.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font style="FONT-FAMILY: Times New Roman" size="2">For both iPhone
and Apple TV, the Company has indicated it may from time-to-time
provide future unspecified software upgrades and features free of
charge to customers. The Company has identified two deliverables
generally contained in arrangements involving the sale of iPhone
and Apple TV. The first deliverable is the hardware and software
essential to the functionality of the hardware device delivered at
the time of sale, and the second deliverable is the right included
with the purchase of iPhone and Apple TV to receive on a
when-and-if-available basis future unspecified software upgrades
and features relating to the product’s essential software.
The Company has allocated revenue between these two deliverables
using the relative selling price method. Because the Company has
neither VSOE nor TPE for the two deliverables the allocation of
revenue has been based on the Company’s ESPs. Amounts
allocated to the delivered hardware and the related essential
software are recognized at the time of sale provided the other
conditions for revenue recognition have been met. Amounts allocated
to the unspecified software upgrade rights are deferred and
recognized on a straight-line basis over the 24-month estimated
life of the related hardware. All product cost of sales, including
estimated warranty costs, are generally recognized at the time of
sale. Costs for engineering and sales and marketing are expensed as
incurred.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font style="FONT-FAMILY: Times New Roman" size="2">For all periods
presented, the Company’s ESP for the software upgrade rights
included with each iPhone and Apple TV sold is $25 and $10,
respectively. The Company’s process for determining its ESP
for deliverables without VSOE or TPE considers multiple factors
that may vary depending upon the unique facts and circumstances
related to each deliverable. The Company believes its customers,
particularly consumers, would be reluctant to buy unspecified
software upgrade rights related to iPhone and Apple TV. This view
is primarily based on the fact that upgrade rights do not obligate
the Company to provide upgrades at a particular time or at all, and
do not specify to customers which upgrades or features will be
delivered in the future. Therefore, the Company has concluded that
if it were to sell upgrade rights on a standalone basis, such as
those included with iPhone and Apple TV, the selling price would be
relatively low. Key factors considered by the Company in developing
the ESPs for iPhone and Apple TV upgrade rights include prices
charged by the Company for similar offerings, the Company’s
historical pricing practices, the nature of the upgrade rights
(e.g., unspecified and when-and-if-available), and the relative ESP
of the upgrade rights as compared to the total selling price of the
product. In addition, when developing ESPs for products other than
iPhone and Apple TV, the Company may consider other factors as
appropriate including the pricing of competitive alternatives if
they exist, and product-specific business objectives.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font style="FONT-FAMILY: Times New Roman" size="2">The Company
accounts for multiple element arrangements that consist only of
software or software-related products, including the sale of
upgrades to previously sold software, in accordance with industry
specific accounting guidance for software and software-related
transactions. For such transactions, revenue on arrangements that
include multiple elements is allocated to each element based on the
relative fair value of each element, and fair value is generally
determined by VSOE. If the Company cannot objectively determine the
fair value of any undelivered element included in such
multiple-element arrangements, the Company defers revenue until all
elements are delivered and services have been performed, or until
fair value can objectively be determined for any remaining
undelivered elements. When the fair value of a delivered element
has not been established, but fair value exists for the undelivered
elements, the Company uses the residual method to recognize revenue
if the fair value of all undelivered elements is determinable.
Under the residual method, the fair value of the undelivered
elements is deferred and the remaining portion of the arrangement
fee is allocated to the delivered elements and is recognized as
revenue.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font style="FONT-FAMILY: Times New Roman" size="2">Except as
described for iPhone and Apple TV, the Company generally does not
offer specified or unspecified upgrade rights to its customers in
connection with software sales or the sale of extended warranty and
support contracts. A limited number of the Company’s software
products are available with maintenance agreements that grant
customers rights to unspecified future upgrades over the
maintenance term on a when and if available basis. Revenue
associated with such maintenance is recognized ratably over the
maintenance term.</font></p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>Fair Value
Measurements</b></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px" align="justify">
<font style="FONT-FAMILY: Times New Roman" size="2">During 2009,
the Company adopted the FASB’s new accounting standard on
fair value measurements and disclosures for all financial assets
and liabilities. The new accounting principles defined fair value,
provided a framework for measuring fair value, and expanded the
disclosures required for fair value measurements. During the first
quarter of 2010, the Company adopted the new fair value accounting
principles for all non-financial assets and non-financial
liabilities, except for items that are recognized or disclosed at
fair value in the financial statements on a recurring basis, which
did not have a material effect on the Company’s financial
condition or operating results.</font></p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>Business
Combinations</b></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px" align="justify">
<font style="FONT-FAMILY: Times New Roman" size="2">In December
2007, the FASB issued a new accounting standard for business
combinations, which established principles and requirements for how
an acquirer is to recognize and measure in its financial statements
the identifiable assets acquired, the liabilities assumed, and any
noncontrolling interest in the acquiree in a business combination.
This new accounting standard also established principles regarding
how goodwill acquired in a business combination or a gain from a
bargain purchase should be recognized and measured, as well as
provides guidelines on the disclosure requirements. In April 2009,
the FASB amended this new accounting standard to require that
assets acquired and liabilities assumed in a business combination
that arise from contingencies be recognized at fair value, if the
fair value can be determined during the measurement period. The
Company adopted the new business combination accounting standard in
the first quarter of 2010 and applied these principles to any
business combinations completed in or after the first quarter of
2010. The adoption of the new business combination accounting
standard did not have a material effect on the Company’s
financial condition or operating results.</font></p>
</div>Note 1 – Summary
of Significant Accounting Policies
Apple Inc. and
its wholly-owned subsidiaries (collectively “Apple” or
thefalsefalsefalseThis element may be used to describe all significant accounting policies of the reporting entity.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Principles Board Opinion (APB)
-Number 22
-Paragraph 8
falsefalse11falseUnKnownUnKnownUnKnownfalsetrue