Question

BTN 1-1 Managerial accounting is more than recording, maintaining, and reporting financial results. Managerial accountants must provide managers with both financial and nonfinancial information includ- ing estimates, projections, and forecasts. An important estimate for Apple is its reserve for warranty claims, and the company must provide shareholders information on these estimates. REPORTING IN ACTION C1 Required 1. Access Apple's 2015 10-K report, filed with the SEC on October 28, 2015, and find Note 10- APPLE Commitments and Contingencies. What amount of warranty expense did Apple record for 2015? 2. What amount of warranty claims did Apple pay during 2015? 3. What is Apple's accrued warranty liability at the end of 2015? Fast Forward 4. Access Apple's annual report for a fiscal year ending after September 26, 2015, from either its website (Apple.com) or the SEC's EDGAR database (SEC.gov). Answer the questions in parts 1, 2, and 3 after reading the current Note 10. Identify any major changes.

Answer 1

Apple Inc - Extract from the Notes to Accounts of the Company

1. The Company has recorded an expense of $ 5,022 million in the financials.

2. The Company has paid $ 4,401 million during the financial year 2015.

3. The Company has an accrued warranty liability of $ 4,780 million at the end of 2015.

Major Changes Noted

1. Warranty cost as a % of revenue is 2.15% in 2015 Vs 2.71% in 2014. This means that there has been less warranty claim as compare to previous year. This is may be due to better efficiency and better quality products.