Accounting rule change approved by FASB
The change allows companies like Apple to recognize revenue much faster.
After a preliminary agreement last week the Financial Accounting Standards Board made it official Wednesday, accepting proposed changes to how companies recognize revenue.
The change will be of particular interest to companies like Apple, which has stuck to a rather bewildering accounting practice of recognizing revenue from sales of the iPhone and Apple TV over a period of two years, or eight financial quarters. The practice was put in place on those two products to avoid charging a fee for every product upgrade--something Apple was told it would need to satisfy accounting regulations that require companies to establish a value for product upgrades.
The new rule won't change the amount of revenue coming into corporate coffers, but it will allow investors to have a more accurate picture of how much money companies are making every quarter. Apple is a company that many point to as benefiting from this rule change because of the enormous popularity of the iPhone.