Decision Making Report of Apple Inc.
The traditional accounting equation is given as Assets = Liabilities + Shareholder`s equity
As at 27 September 2014 (Beginning of period) $231,839M = $120, 292M + $111,547M
As at 26 September 2015 (End of period) $290,479M = $171,124M + $119,355M
(Apple, 2015, pg.41)
During the financial period ending 26 September 2015, Apple`s Assets grew by 25%, its Liabilities increased by 42.3% while its Shareholder`s Equity increased by just 7%. Therefore, the accounting equations given above reveal that Apple`s financing policy entails the financing of assets through the borrowing of money as opposed to the use of its Shareholder`s Equity, subsequently increasing its Liabilities.
According to the company`s financial statements, the Advertising Costs for 2015, 2014 and 2013 respectively stood at $1.8B, $1.2B and $1.1B (Apple, 2015, pg. 46). It should be noted from the financial statements that these cost are included as part of the company`s Selling, General and Administration Expenses according to its financial statements.
Explain how Apple could apply the principle of materiality of an item of financial information when preparing financial reports.
According to the International Financial Reporting Standards, items are considered material in the preparation of financial statements if their impact is significant enough to influence the economic decisions that are made by the stakeholders who use the financial statements, more so its investors. The Apple Corporation could apply the materiality Principle by first evaluating the extent to which certain components of the financial statements ultimately impact the business and financial decisions of it stakeholders. These components include:
The company`s business strategy, that is, the market segments that it specifically targets
The organization of the business in terms of the specific geographic jurisdictions where it operates
The specific products and services that the company sells
The competition that it continually faces in the course of its operations
The seasonality of the business cycle as well as projected new product introductions
Specific risk factors that may adversely affect the business such as a global economic slumps or an unfavorable legal decision against the company among other factors.
List examples of such additional corporate reporting by Apple.
Environment – the company`s use of renewable energy and resources; recycling and other green business practices that it has currently incorporated in its operations (Apple, 2016)
Supplier responsibility – the company’s performance depends entirely on the performance of its distributors and resellers (Apple, 2015, pg.9).
Accessibility – Apple`s devices are built as assistive devices in nature as they are designed to be easy to work with. This is information is also included in the addendum to the financial reports (Apple, 2016).
Privacy – Apple is heavily committed towards upholding the privacy of the information of its customers at all costs (Apple, 2016).
Inclusion and diversity – the company continually focuses on equality for each and every one of its stakeholders whether they are employees or customers (Apple, 2016).
Education – the company provides educational opportunities, supporting resources and the relevant products to educational facilities and schools that need them the most (Apple, 2016).
Reference List
Apple Corporation., 2015. Form 10-K (online). Available at:
< http://files.shareholder.com/downloads/AAPL/1458918835x0x861262/2601797E-6590-4CAA-86C9-962348440FFC/2015_Form_10-K_As-filed_.pdf>
(Accessed 4 April 2016)
