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0000320193 | 20141027 | 10-K | 926 | 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. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 927 | For sales of qualifying versions of iPhone, iPad and iPod touch (“iOS devices”), Mac and Apple TV, the Company has indicated it may from time to time provide future unspecified software upgrades and features to the essential software bundled with each of these hardware products free of charge to customers. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 928 | Essential software for iOS devices includes iOS and related applications and for Mac includes OS X and related applications. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 929 | The Company also provides various non-software services to owners of qualifying versions of iOS devices and Mac. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 930 | The Company has identified up to three deliverables regularly included in arrangements involving the sale of these devices. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 931 | The first deliverable is the hardware and software essential to the functionality of the hardware device delivered at the time of sale. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 932 | The second deliverable is the embedded right included with the purchase of iOS devices, Mac 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. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 933 | The third deliverable is the non-software services to be provided to qualifying versions of iOS devices and Mac. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 934 | The Company allocates revenue between these deliverables using the relative selling price method. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 935 | Because the Company has neither VSOE nor TPE for these deliverables, the allocation of revenue is based on the Company’s ESPs. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 936 | 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. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 937 | Revenue allocated to the embedded unspecified
Apple Inc. | 2014 Form 10-K | 51
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 for each of these devices, which ... | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 938 | Cost of sales related to delivered hardware and related essential software, including estimated warranty costs, are recognized at the time of sale. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 939 | 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. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 940 | 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. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 941 | The Company believes its customers would be reluctant to buy unspecified software upgrade rights for the essential software included with its qualifying hardware products. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 942 | This view is primarily based on the fact that unspecified software 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. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 943 | The Company also believes its customers would be unwilling to pay a significant amount for access to the non-software services because other companies offer similar services at little or no cost to users. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 944 | Therefore, the Company has concluded that if it were to sell upgrade rights or access to the non-software services on a standalone basis, including those rights and services attached to iOS devices, Mac and Apple TV, the selling prices would be relatively low. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 945 | Key factors considered by the Company in developing the ESPs for software upgrade rights include prices charged by the Company for similar offerings, market trends in the pricing of Apple-branded and third-party Mac and iOS compatible software, the nature of the upgrade rights (e.g., unspecified versus specified) and t... | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 946 | The Company may also consider additional factors as appropriate, including the impact of other products and services provided to customers, the pricing of competitive alternatives if they exist, product-specific business objectives and the length of time a particular version of a device has been available. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 947 | When relevant, the same factors are considered by the Company in developing ESPs for offerings such as the non-software services with additional consideration given to the estimated cost to provide such services. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 948 | In 2014, 2013 and 2012, the Company’s combined ESPs for the unspecified software upgrade rights and the rights to receive the non-software services included with its qualifying hardware devices have ranged from $5 to $40. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 949 | As of September 27, 2014, the combined ESPs for Mac was $40 and for iPhone and iPad ranged from $15 to $25. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 950 | Revenue allocated to such rights is deferred and recognized on a straight-line basis over the estimated period the rights are expected to be provided for each device, which ranges from two to four years. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 951 | Shipping Costs
For all periods presented, amounts billed to customers related to shipping and handling are classified as revenue, and the Company’s shipping and handling costs are included in cost of sales. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 952 | Warranty Costs
The Company generally provides for the estimated cost of hardware and software warranties at the time the related revenue is recognized. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 953 | The Company assesses the adequacy of its pre-existing warranty liabilities and adjusts the amounts as necessary based on actual experience and changes in future estimates. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 954 | Software Development Costs
Research and development (“R&D”) costs are expensed as incurred. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 955 | 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. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 956 | In most instances, the Company’s products are released soon after technological feasibility has been established. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 957 | Costs incurred subsequent to achievement of technological feasibility were not significant, and software development costs were expensed as incurred during 2014, 2013 and 2012. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 958 | Advertising Costs
Advertising costs are expensed as incurred and included in selling, general and administrative expenses. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 959 | Advertising expense was $1.2 billion, $1.1 billion and $1.0 billion for 2014, 2013 and 2012, respectively. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 960 | Apple Inc. | 2014 Form 10-K | 52
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 enterprise’s equity instruments or ... | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 961 | 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. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 962 | 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 metrics. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 963 | The Company recognizes a benefit from share-based compensation in the Consolidated Statements of Shareholders’ Equity if an incremental tax benefit is realized. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 964 | 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. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 965 | Further information regarding share-based compensation can be found in Note 9, “Benefit Plans” of this Form 10-K.
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 tempo... | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 966 | 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 are expected to be realized or settled. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 967 | The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 968 | 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. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 969 | 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. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 970 | See Note 5, “Income Taxes” of this Form 10-K for additional information. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 971 | 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. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 972 | 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... | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 973 | Potentially dilutive securities include outstanding stock options, shares to be purchased under the Company’s employee stock purchase plan, unvested restricted stock and unvested RSUs. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 974 | The dilutive effect of potentially dilutive securities is reflected in diluted earnings per share by application of the treasury stock method. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 975 | 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. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 976 | The following table shows the computation of basic and diluted earnings per share for 2014, 2013 and 2012 (net income in millions and shares in thousands):
Potentially dilutive securities, the effect of which would have been antidilutive, were not significant for 2014, 2013 and 2012. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 977 | The Company excluded these securities from the computation of diluted earnings per share. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 978 | Apple Inc. | 2014 Form 10-K | 53
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. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 979 | The Company’s marketable debt and equity securities have been classified and accounted for as available-for-sale. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 980 | Management determines the appropriate classification of its investments at the time of purchase and reevaluates the designations at each balance sheet date. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 981 | The Company classifies its marketable debt securities as either short-term or long-term based on each instrument’s underlying contractual maturity date. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 982 | 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. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 983 | The Company classifies its marketable equity securities, including mutual funds, as either short-term or long-term based on the nature of each security and its availability for use in current operations. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 984 | The Company’s marketable debt and equity securities are carried at fair value, with the unrealized gains and losses, net of taxes, reported as a component of shareholders’ equity. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 985 | The cost of securities sold is based upon the specific identification method. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 986 | Derivative Financial Instruments
The Company accounts for its derivative instruments as either assets or liabilities and carries them at fair value. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 987 | 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 income in the same period or pe... | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 988 | The ineffective portion of the gain or loss on the derivative instrument, if any, is recognized in current income. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 989 | To receive hedge accounting treatment, cash flow hedges must be highly effective in offsetting changes to expected future cash flows on hedged transactions. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 990 | For options designated as cash flow hedges, changes in the time value are excluded from the assessment of hedge effectiveness and are recognized in income. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 991 | 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 attributable to the hedged risk are recognized in earn... | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 992 | For derivative instruments designated as a hedge of the foreign currency translation exposure of the net investment in a foreign operation, the net gain or loss on the effective portion of the derivative instrument is reported in the same manner as a foreign currency translation adjustment. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 993 | 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. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 994 | Accordingly, any gains or losses related to this component are recognized in current income. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 995 | Derivatives that do not qualify as hedges are adjusted to fair value through current income. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 996 | Allowance for Doubtful Accounts
The Company records its allowance for doubtful accounts based upon its assessment of various factors. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 997 | The Company considers historical experience, the age of the accounts receivable balances, credit quality of the Company’s customers, current economic conditions and other factors that may affect customers’ ability to pay. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 998 | Inventories
Inventories are stated at the lower of cost, computed using the first-in, first-out method, or market. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 999 | If the cost of the inventories exceeds their market value, provisions are made currently for the difference between the cost and the market value. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 1,000 | Property, Plant and Equipment
Property, plant and equipment are stated at cost. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 1,001 | 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 two to five years for machinery and equipment, including product tooling and manufacturing process equipment;... | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 1,002 | The Company capitalizes eligible costs to acquire or develop internal-use software that are incurred subsequent to the preliminary project stage. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 1,003 | 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. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 1,004 | Depreciation and amortization expense on property and equipment was $6.9 billion, $5.8 billion and $2.6 billion during 2014, 2013 and 2012, respectively. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 1,005 | Apple Inc. | 2014 Form 10-K | 54
Long-Lived Assets Including Goodwill and Other Acquired Intangible Assets
The Company reviews property, plant and equipment, inventory component prepayments and certain identifiable intangibles, excluding goodwill, for impairment. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 1,006 | Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 1,007 | Recoverability of these assets is measured by comparison of their carrying amounts to future undiscounted cash flows the assets are expected to generate. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 1,008 | 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. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 1,009 | The Company did not record any significant impairments during 2014, 2013 and 2012. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 1,010 | 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. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 1,011 | The Company performs its goodwill and intangible asset impairment tests in the fourth quarter of each year. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 1,012 | The Company did not recognize any impairment charges related to goodwill or indefinite lived intangible assets during 2014, 2013 and 2012. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 1,013 | The Company established reporting units based on its current reporting structure. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 1,014 | For purposes of testing goodwill for impairment, goodwill has been allocated to these reporting units to the extent it relates to each reporting unit. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 1,015 | In 2014 and 2013, the Company’s goodwill was allocated to the Americas and Europe reportable operating segments. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 1,016 | The Company amortizes its intangible assets with definite useful lives over their estimated useful lives and reviews these assets for impairment. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 1,017 | The Company typically amortizes its acquired intangible assets with definite useful lives over periods from three to seven years. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 1,018 | 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. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 1,019 | 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. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 1,020 | When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricin... | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 1,021 | Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:
Level 1 - Quoted prices in active marke... | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 1,022 | Level 2 - Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset... | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 1,023 | Level 3 - Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 1,024 | The Company’s valuation techniques used to measure the fair value of money market funds and certain marketable equity securities were derived from quoted prices in active markets for identical assets or liabilities. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 1,025 | The valuation techniques used to measure the fair value of the Company’s debt instruments and all other financial instruments, all of which have counterparties with high credit ratings, were valued based on quoted market prices or model driven valuations using significant inputs derived from or corroborated by observab... | 0001193125-14-383437/full-submission.txt |
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