Apple 1994 Annual Report Download - page 30

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Notes to Consolidated Financial Statements
Summary of Significant Accounting Policies
Basis of Presentation
The consolidated financial statements include the accounts of Apple Computer, Inc. and its wholly owned subsidiaries (the Company).
Intercompany accounts and transactions have been eliminated. The Company's fiscal year-end is the last Friday in September.
Revenue Recognition
The Company recognizes revenue at the time products are shipped. Provisions are made currently for estimated product returns and price
protection that may occur under Company programs. Historically, actual amounts recorded for product returns and price protection have not
varied significantly from estimated amounts.
Warranty Expense
The Company provides currently for the estimated cost that may be incurred under product warranties when products are shipped.
Foreign Currency
Gains and losses resulting from foreign currency translation are accumulated as a separate component of shareholders' equity until the foreign
entity is sold or liquidated. Gains and losses resulting from foreign currency transactions are included in the consolidated statements of income.
Financial Instruments
All highly liquid investments with a maturity of three months or less at the date of purchase are considered to be cash equivalents; investments
with maturities between three and twelve months are considered to be short-term investments. A substantial portion of the Company's cash,
cash equivalents, and short-term investments is held by foreign subsidiaries and is generally based in U.S. dollar-denominated holdings.
Amounts held by foreign subsidiaries would be subject to U.S. income taxation upon repatriation to the United States; the Company's financial
statements fully provide for any related tax liability on amounts that may be repatriated, aside from undistributed earnings that are intended to
be indefinitely invested.
The Company has not elected early adoption of Financial Accounting Standard No. 115 (FAS 115), "Accounting for Certain Investments in
Debt and Equity Securities". FAS 115 becomes effective beginning with the Company's first quarter of fiscal year 1995. The principal impact
of the new statement is to replace the historical cost accounting approach for certain investments in debt and equity securities with one based
on fair value. The Company does not expect adoption of FAS 115 to have a material effect on its financial position or results of operations.
For further information regarding the Company's accounting treatment of other financial and derivative instruments, refer to pages 28-31 of the
Notes to Consolidated Financial Statements.
Income Taxes
Effective September 25, 1993, the Company adopted Financial Accounting Standard No. 109 (FAS 109), "Accounting for Income Taxes,"
which changes the method of accounting for income taxes from the deferred method to the liability method. This change in accounting
principle has been adopted on a prospective basis, and the financial statements of years ended prior to September 25, 1993, have not been
restated. The cumulative effect of the change was not material. Under FAS 109, deferred tax assets and liabilities reflect the future income tax
effects of temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates that apply to taxable income in the years in which those
temporary differences are
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