There are two good articles in Sat. WSJ, on the same page. Both are relevant to Apple.
The first one deals with this fee, now set at $1.99.
Here is the deal.
Apple is telling the truth, and fudging at the same time.
According to The Article:
Apple Gets a Bruise by Blaming A $1.99 Fee on Accounting Rules
I'll quote some from the article.
"GAAP doesn't require you to charge squat," says Lynn Turner, managing director of research at Glass Lewis & Co. and a former chief accountant of the Securities and Exchange Commission.
"So, why would Apple charge customers if it didn't have to? The company felt it had no choice, based on the accounting outcome that would have resulted had it given the product away, said a person familiar with the matter. In that sense, even if the accounting rules didn't explicitly say such a charge was necessary, that was the result, this person said..."
"Still, Apple's language surprised officials who oversee accounting rules. "Accounting doesn't require any charge for anything," says Edward Trott, a member of the Financial Accounting Standards Board, which writes the accounting rules. "No, GAAP doesn't tell you to do anything. You need to work out your transaction with your customer, and GAAP will tell you how to reflect your transaction with that customer."
"The accounting rules in this case are analogous, accounting experts say, to income-tax rules affecting the sale of stock. If an investor sells shares less than a year year after buying, gains are taxed at personal income-tax rates that can range as high as 35%. If the investor sells after holding the stock for more than a year, gains are taxed at the capital-gains rate of 15%.
The income-tax rules dictate the amount of tax to be paid, but they don't tell the person when, or whether, to sell."
This is interesting. What is being said, is that Apple gains financially, as far as taxes are concerned, by charging this fee.
It also says (not directly, but by explaining what the rules are) that there is no penalty by NOT charging this fee, just no tax advantage.
Apple therefore, does NOT have to charge this fee. They are doing it because they want to.
I wouldn't mind that, being a stockholder, and all, but I would prefer they "come clean" , and explain WHY they are doing this, rather than making it sound as though they HAVE to.
The other article,
How Expensing for Options Throws Analysts Off Course
is very interesting, and explains why so many analysts are not in ageeement, something we have commented upon here many times.
I won't get into it unless there is interest here, or it's thought I should bring it up somewhere else.
It would be nice if the WSJ website was not paid subscription, or I would simply post links. As it is, sometimes you can read the first couple of lines, whic isnt useful, except to prove to those few natural skeptics here that the article really does exist online as well. But, I didn't look.