Write a preliminary analysis
of Apple Computer, Inc. In Part A of your report, you should address the
company’s business and the economic environment in which it operates. In Part
B, you should address Apple’s financial reporting policies, practices, and procedures.
(Subsequent assignments will require detailed analyses of the financial
statements; therefore, do not analyze the numbers in this report.) Your
Activity responses should be both grammatically and mechanically correct and
formatted in the same fashion as the Activity itself. If there is a Part A,
your response should identify a Part A, etc. In addition, you must
appropriately cite all resources used in your response and document them in a
bibliography using APA style. (100 points) (A 5-page response is required.)
Part A To assist you in
addressing this topic, you should consider the following points. (50 points)
1. Determine Apple’s business,
as identified by the company.
2. Discuss economic conditions
from 1999 through 2002.
3. Discuss five (5) trends in
the personal computer industry.
Part B Analyze Apple’s
financial reporting practices, policies, and procedures by addressing the
following points. (50 points)
1. Verify that Apple reports on
a consolidated basis by citing at least two (2) sources supporting that
management assertion.
2. Discuss how the company
accounts for its short-term investments and the effect on unrealized gains and
losses on income.
3. Explain how non-hedge
derivative instruments are valued on the balance sheet and their impact on
income.
4. Determine whether Apple
carries only finished goods inventory or raw materials and work in process
inventories as well as finished goods. Discuss the company’s inventory
costing method.
5. Explain whether the
company’s functional currency for foreign subsidiaries is the U.S. dollar or
the currency of the foreign subsidiaries.
6. Discuss the extent to which
Apple has a defined benefit pension plan.
7. Determine whether the
company charges stock options against revenues in the income statement or
discloses their cost on a pro-forma basis.
8. Categorize the independent
auditor’s report.
9. Determine when Apple
recognizes revenues and discuss a strategy for assessing whether its revenue
recognition policy is comparable to industry standards.
