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0000320193 | 20161026 | 10-K | 838 | For payment terms in excess of the Company’s standard payment terms, revenue is recognized as payments become due unless the Company has positive evidence that the sales price is fixed or determinable, such as a successful history of collection, without concession, on comparable arrangements. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 839 | The Company recognizes revenue from the sale of hardware products, 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. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 840 | 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. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 841 | For the sale of most third-party products, the Company recognizes revenue based on the gross amount billed to customers because the Company establishes its own pricing for such products, retains related inventory risk for physical products, is the primary obligor to the customer and assumes the credit risk for amounts ... | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 842 | For third-party applications sold through the App Store and Mac App Store and certain digital content sold through the iTunes Store, the Company does not determine the selling price of the products and is not the primary obligor to the customer. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 843 | Therefore, the Company accounts for such sales on a net basis by recognizing in net sales only the commission it retains from each sale. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 844 | The portion of the gross amount billed to customers that is remitted by the Company to third-party app developers and certain digital content owners is not reflected in the Company’s Consolidated Statements of Operations. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 845 | Apple Inc. | 2016 Form 10-K | 44
The Company records deferred revenue when it receives payments in advance of the delivery of products or the performance of services. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 846 | This includes amounts that have been deferred for unspecified and specified software upgrade rights and non-software services that are attached to hardware and software products. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 847 | The Company sells gift cards redeemable at its retail and online stores, and also sells gift cards redeemable on iTunes Store, App Store, Mac App Store, TV App Store and iBooks Store for the purchase of digital content and software. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 848 | The Company records deferred revenue upon the sale of the card, which is relieved upon redemption of the card by the customer. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 849 | Revenue from AppleCare service and support contracts is deferred and recognized over the service coverage periods. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 850 | AppleCare service and support contracts typically include extended phone support, repair services, web-based support resources and diagnostic tools offered under the Company’s standard limited warranty. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 851 | The Company records reductions to revenue for estimated commitments related to price protection and other customer incentive programs. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 852 | For transactions involving price protection, the Company recognizes revenue net of the estimated amount to be refunded. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 853 | For the Company’s other customer incentive programs, the estimated cost of these programs is recognized at the later of the date at which the Company has sold the product or the date at which the program is offered. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 854 | The Company also records reductions to revenue for expected future product returns based on the Company’s historical experience. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 855 | 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. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 856 | Revenue Recognition for Arrangements with Multiple Deliverables
For multi-element arrangements that include hardware products containing software essential to the hardware product’s functionality, undelivered software elements that relate to the hardware product’s essential software, and undelivered non-software servic... | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 857 | In such circumstances, the Company uses a hierarchy to determine the selling price to be used for allocating revenue to deliverables: (i) vendor-specific objective evidence of fair value (“VSOE”), (ii) third-party evidence of selling price (“TPE”) and (iii) best estimate of selling price (“ESP”). | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 858 | VSOE generally exists only when the Company sells the deliverable separately and is the price actually charged by the Company for that deliverable. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 859 | 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. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 860 | For multi-element arrangements accounted for in accordance with industry specific software accounting guidance, the Company allocates revenue to all deliverables based on the VSOE of each element, and if VSOE does not exist revenue is recognized when elements lacking VSOE are delivered. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 861 | For sales of qualifying versions of iPhone, iPad, iPod touch, Mac, Apple Watch and Apple TV, the Company has indicated it may from time to time provide future unspecified software upgrades to the device’s essential software and/or non-software services free of charge. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 862 | The Company has identified up to three deliverables regularly included in arrangements involving the sale of these devices. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 863 | The first deliverable, which represents the substantial portion of the allocated sales price, is the hardware and software essential to the functionality of the hardware device delivered at the time of sale. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 864 | The second deliverable is the embedded right included with qualifying devices to receive on a when-and-if-available basis, future unspecified software upgrades relating to the product’s essential software. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 865 | The third deliverable is the non-software services to be provided to qualifying devices. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 866 | The Company allocates revenue between these deliverables using the relative selling price method. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 867 | Because the Company has neither VSOE nor TPE for these deliverables, the allocation of revenue is based on the Company’s ESPs. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 868 | Revenue allocated to the delivered hardware and the related essential software is recognized at the time of sale provided the other conditions for revenue recognition have been met. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 869 | Revenue allocated to the embedded unspecified software upgrade rights and the non-software services is deferred and recognized on a straight-line basis over the estimated period the software upgrades and non-software services are expected to be provided. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 870 | Cost of sales related to delivered hardware and related essential software, including estimated warranty costs, are recognized at the time of sale. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 871 | Costs incurred to provide non-software services are recognized as cost of sales as incurred, and engineering and sales and marketing costs are recognized as operating expenses as incurred. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 872 | 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 including, where applicable, prices charged by the Company and market trends in the pricing for similar offerings, pro... | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 873 | Shipping Costs
Amounts billed to customers related to shipping and handling are classified as revenue, and the Company’s shipping and handling costs are classified as cost of sales. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 874 | Warranty Costs
The Company generally provides for the estimated cost of hardware and software warranties in the period the related revenue is recognized. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 875 | The Company assesses the adequacy of its accrued warranty liabilities and adjusts the amounts as necessary based on actual experience and changes in future estimates. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 876 | Apple Inc. | 2016 Form 10-K | 45
Software Development Costs
Research and development (“R&D”) costs are expensed as incurred. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 877 | Development costs of computer software to be sold, leased, or otherwise marketed are subject to capitalization beginning when a product’s technological feasibility has been established and ending when a product is available for general release to customers. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 878 | In most instances, the Company’s products are released soon after technological feasibility has been established and as a result software development costs were expensed as incurred. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 879 | Advertising Costs
Advertising costs are expensed as incurred and included in selling, general and administrative expenses. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 880 | Share-based Compensation
The Company recognizes expense related to share-based payment transactions in which it receives employee services in exchange for (a) equity instruments of the Company or (b) liabilities that are based on the fair value of the Company’s equity instruments or that may be settled by the issuance ... | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 881 | Share-based compensation cost for restricted stock and restricted stock units (“RSUs”) is measured based on the closing fair market value of the Company’s common stock on the date of grant. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 882 | The Company recognizes share-based compensation cost over the award’s requisite service period on a straight-line basis for time-based RSUs and on a graded basis for RSUs that are contingent on the achievement of performance conditions. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 883 | The Company recognizes a benefit from share-based compensation in the Consolidated Statements of Shareholders’ Equity if an excess tax benefit is realized. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 884 | In addition, the Company recognizes the indirect effects of share-based compensation on R&D tax credits, foreign tax credits and domestic manufacturing deductions in the Consolidated Statements of Operations. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 885 | Further information regarding share-based compensation can be found in Note 9, “Benefit Plans.”
Income Taxes
The provision for income taxes is computed using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences b... | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 886 | Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets and liabilities are expected to be realized or settled. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 887 | The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 888 | The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 889 | The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 890 | See Note 5, “Income Taxes” for additional information. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 891 | Earnings Per Share
Basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 892 | Diluted earnings per 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 h... | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 893 | Potentially dilutive securities include outstanding stock options, shares to be purchased by employees under the Company’s employee stock purchase plan, unvested restricted stock and unvested RSUs. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 894 | The dilutive effect of potentially dilutive securities is reflected in diluted earnings per share by application of the treasury stock method. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 895 | 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. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 896 | Apple Inc. | 2016 Form 10-K | 46
The following table shows the computation of basic and diluted earnings per share for 2016, 2015 and 2014 (net income in millions and shares in thousands):
Potentially dilutive securities whose effect would have been antidilutive are excluded from the computation of diluted earnings per... | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 897 | Financial Instruments
Cash Equivalents and Marketable Securities
All highly liquid investments with maturities of three months or less at the date of purchase are classified as cash equivalents. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 898 | The Company’s marketable debt and equity securities have been classified and accounted for as available-for-sale. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 899 | Management determines the appropriate classification of its investments at the time of purchase and reevaluates the classifications at each balance sheet date. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 900 | The Company classifies its marketable debt securities as either short-term or long-term based on each instrument’s underlying contractual maturity date. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 901 | Marketable debt securities with maturities of 12 months or less are classified as short-term and marketable debt securities with maturities greater than 12 months are classified as long-term. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 902 | Marketable equity securities, including mutual funds, are classified as either short-term or long-term based on the nature of each security and its availability for use in current operations. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 903 | The Company’s marketable debt and equity securities are carried at fair value, with unrealized gains and losses, net of taxes, reported as a component of accumulated other comprehensive income (“AOCI”) in shareholders’ equity, with the exception of unrealized losses believed to be other-than-temporary which are reporte... | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 904 | The cost of securities sold is based upon the specific identification method. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 905 | Derivative Financial Instruments
The Company accounts for its derivative instruments as either assets or liabilities and carries them at fair value. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 906 | For derivative instruments that hedge the exposure to variability in expected future cash flows that are designated as cash flow hedges, the effective portion of the gain or loss on the derivative instrument is reported as a component of AOCI in shareholders’ equity and reclassified into earnings in the same period or ... | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 907 | The ineffective portion of the gain or loss on the derivative instrument, if any, is recognized in earnings in the current period. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 908 | To receive hedge accounting treatment, cash flow hedges must be highly effective in offsetting changes to expected future cash flows on hedged transactions. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 909 | For options designated as cash flow hedges, changes in the time value are excluded from the assessment of hedge effectiveness and are recognized in earnings. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 910 | For derivative instruments that hedge the exposure to changes in the fair value of an asset or a liability and that are designated as fair value hedges, both the net gain or loss on the derivative instrument as well as the offsetting gain or loss on the hedged item are recognized in earnings in the current period. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 911 | For derivative instruments and foreign currency debt that hedge the exposure to changes in foreign currency exchange rates used for translation of the net investment in a foreign operation and that are designated as a net investment hedge, the net gain or loss on the effective portion of the derivative instrument is re... | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 912 | For forward exchange contracts designated as net investment hedges, the Company excludes changes in fair value relating to changes in the forward carry component from its definition of effectiveness. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 913 | Accordingly, any gains or losses related to this forward carry component are recognized in earnings in the current period. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 914 | Derivatives that do not qualify as hedges are adjusted to fair value through earnings in the current period. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 915 | Apple Inc. | 2016 Form 10-K | 47
Allowance for Doubtful Accounts
The Company records its allowance for doubtful accounts based upon its assessment of various factors, including historical experience, age of the accounts receivable balances, credit quality of the Company’s customers, current economic conditions and othe... | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 916 | Inventories
Inventories are stated at the lower of cost, computed using the first-in, first-out method and net realizable value. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 917 | Any adjustments to reduce the cost of inventories to their net realizable value are recognized in earnings in the current period. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 918 | As of September 24, 2016 and September 26, 2015, the Company’s inventories consist primarily of finished goods. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 919 | Property, Plant and Equipment
Property, plant and equipment are stated at cost. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 920 | Depreciation is computed by use of the straight-line method over the estimated useful lives of the assets, which for buildings is the lesser of 30 years or the remaining life of the underlying building; between one to five years for machinery and equipment, including product tooling and manufacturing process equipment;... | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 921 | The Company capitalizes eligible costs to acquire or develop internal-use software that are incurred subsequent to the preliminary project stage. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 922 | Capitalized costs related to internal-use software are amortized using the straight-line method over the estimated useful lives of the assets, which range from three to five years. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 923 | Depreciation and amortization expense on property and equipment was $8.3 billion, $9.2 billion and $6.9 billion during 2016, 2015 and 2014, respectively. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 924 | Long-Lived Assets Including Goodwill and Other Acquired Intangible Assets
The Company reviews property, plant and equipment, inventory component prepayments and identifiable intangibles, excluding goodwill and intangible assets with indefinite useful lives, for impairment. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 925 | Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 926 | Recoverability of these assets is measured by comparison of their carrying amounts to future undiscounted cash flows the assets are expected to generate. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 927 | If property, plant and equipment, inventory component prepayments and certain identifiable intangibles are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the assets exceeds its fair value. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 928 | The Company does not amortize goodwill and intangible assets with indefinite useful lives, rather such assets are required to be tested for impairment at least annually or sooner whenever events or changes in circumstances indicate that the assets may be impaired. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 929 | The Company performs its goodwill and intangible asset impairment tests in the fourth quarter of each year. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 930 | The Company did not recognize any impairment charges related to goodwill or indefinite lived intangible assets during 2016, 2015 and 2014. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 931 | For purposes of testing goodwill for impairment, the Company established reporting units based on its current reporting structure. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 932 | Goodwill has been allocated to these reporting units to the extent it relates to each reporting unit. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 933 | In 2016 and 2015, the Company’s goodwill was primarily allocated to the Americas and Europe reporting units. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 934 | The Company amortizes its intangible assets with definite useful lives over their estimated useful lives and reviews these assets for impairment. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 935 | The Company typically amortizes its acquired intangible assets with definite useful lives over periods from three to seven years. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 936 | Fair Value Measurements
The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. | 0001628280-16-020309/full-submission.txt |
0000320193 | 20161026 | 10-K | 937 | The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. | 0001628280-16-020309/full-submission.txt |
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