Can someone please answer something for me?
Is Apple the only company on the planet affected by this 'Sarbanes-Oxley' act? Why is it then that I've never, ever heard of any other situation where this has applied on any other company? I'm asking a sincere, serious question, because I'm dumbfounded. I've installed completely new, free software from Microsoft on my windows machine which was not included or in existence when I bought my machine so... where the hell does this act apply? Why does it not apply for the remote app, and other free apps that apple has in the appstore? How the hell is facetime different? It's not.
This sounds so much like a crock of ****. I consider myself to be rational, objective, and intelligent, yet I don't see any consistency or historical reason to believe that Apple is being 'forced' to put a price on this app, and I don't like being lied to. If it's 0.99, fine, but let's not blame some ******** legislation which apparently is not applied on any other product I've ever bought or on software of any other company on the planet.
I'll preface this saying I am a CPA, I work in Big 4 Public Accounting on audits of public, multi-million to billion dollar companies.
All PUBLIC companies, aka listed on a stock exchange where any one can buy a share of, are subject to the requirements of the Sarbanes - Oxley act. It was passed following the frauds perpetuated at Enron, Worldcom, etc. And mainly focuses around the Internal Control requirements that companies must abide by, along with the rules that public accountants must follow in their audits of these companies. Sarbanes-Oxley also created the public accountants best friend, the Public Company Accounting Oversight Board, or the PCAOB. They issue auditing standards which public accounting firms must abide by, among other things. They also perform reviews of the work performed and do a bunch of other stuff only accountants would understand. Think of them as the watchdog entity.
Now, the issue Apple is running into here is derived from US GAAP standards (Generally Accepted Accounting Principles). These rules basically establish how things should be accounted for at public companies and create comparable financial statements (so that an investor can say ok this company has $XXX in assets/liabilities/income etc. and can be compared to this company with $YYY in assets/liabilities/income etc. with confidence that the numbers are derived using the same rules). Every public company is required to get the opinion of a public accounting firm that the financial statements are fairly stated and in accordance with US GAAP, in all material respects. This is my job (one which I am in the middle of our busiest time of year doing).
The accounting standard causing the $0.99 charge from Apple for Facetime is focused around Revenue Recognition. I imagine what Steve was referring to was a change in how Apple was accounting for revenue related to ipods/iphones, one that DID NOT carry over to Macbooks. Basically when a company sells you a product, they recognize revenue at the time of sale. However, if that product has a certain life to it (say software licenses of one year), then the company is required to recognize revenue over the life of the product. For ipods I assume they are carving out a piece of the revenue, tossing it up on the balance sheet as deferred revenue and slowing amortizing (recognizing) the revenue over a set period. If I felt like it I could probably get into their yearend 10-K filing and see the method they are using.
The difference for the Macbooks is that if they've already recognized the revenue related to those sales, but this is representing a significant additional feature, they'd have to go back and say, here is the revenue that matches to this feature (I don't know the particulars in this industry as I have never worked on an audit of a Company like Apple - mainly in Utilities). It is because of the "matching" principle of accounting. Revenues and expenses must be matched to the period and sales for which they relate. Now, in order to get around this, Apple charges $0.99 for the new feature, accounts for the revenue in the current period and is not required to restate prior periods (this is a VERY big deal and would not be something they'd want to do).
Hopefully that makes sense. I had to clear this up because all the BS people were trying to spew was factually wrong. Yes Sarbanes was amended in 2010 and it resulted in the ability for companies to change some accounting policies, but if they didn't switch it for macbooks, then they are SOL.
If you own any Apple product, you can certainly afford $0.99 for an app regardless of whether it used to be free or not. You'll pay more than that for Lion this summer when it ships and that will most likely ship with Facetime HD.
