The three balance sheet accounts of Apple Inc that indicate the use of accruals are accounts receivable, accrued expenses, and other current liabilities. Under the accrual concept of accounting, income and expenditure shall reflect periods earned or incurred and not earned or paid for. As such, the accounts identified will have an impact the income statement account in that, on the one hand, the revenue will increase by an equivalent amount to the receivables charged for the particular year, while, on the other hand, the accrued expenditure will indicate the prepayment of its liabilities and will have an impact on the income statement where the expense will be lower than the amount paid for. In addition, accounts payable will increase the payables expense item amount from actual payment to include charge for the year
From the income statement, the net sales account, research and development, and selling, general and administrative expenses may result in accrual or deferral adjusting entries. To begin with, net sales will consist of accrued amounts given that the company does offer services and products on credit to some of its consumers. In addition, the research and development costs associated with software development are capitalized at the start when the company has established its feasibility and ends after release to consumers (Apple Inc., 2016 p. 46). Lastly, the selling, general and administrative expenses may be accrued given the position of the company to obtain some of its materials on credit terms from its suppliers. As regards deferral of expenses, the research and development and selling, general and administrative expenses may consist of line items that the company has prepaid for. As such, these prepayments will be differed to the balance sheet until the point where they are moved to the actual periods they are supposed to be paid.
The depreciation and amortization amounts for the year ended 24th September 2016 stood at $10.5billion (Apple Inc., 2016 p. 43) the accumulated depreciation and amortization as at the same period was $34.235 billion (Apple Inc., 2016 p. 54). The company utilizes the straight line method of depreciation over the estimated useful life of its assets while amortization is based on the straight line method on Apples capitalized costs as regards software (Apple Inc., 2016 p. 48). The amounts above are reported in the income statement, cash flow statement, and notes to the financial statements of the company and while depreciation refers to the methodological writing down the amount of an asset over its useful life, accumulated depreciation refers to the total amount of the asset(s) value that has been depreciated since purchase to the present time (IFRS, 2017). Amortization, as defined by IAS 38, is the depreciation of intangible and identifiable assets of the organization and accumulated amortization refers the total amount that has been amortized since the intangible asset(s) were recognized in the books of account (IAS, 2017).
Investopedia (2017) defines a tax expense as the liability of taxes that is owed to the government and the provision of taxes as an estimate that a company or individual expects to pay the government. Therein the definition of tax is the cess that a government levies on its citizens and businesses that operate within its jurisdiction. For Apple Inc, the company has both current and deferred provision for taxes to the federal, state and foreign authorities. Federal current taxes stood at $7.6 billion, deferred at $5.04billion, current state at $0.99 billion and deferred state at ($0.138) billion and foreign current at $2.1 billion and deferred at $0.033 billion for the year ended 2016 (Apple Inc., 2016 p. 55). These figures are found under the notes section of Form 10-K as well as the income statement which reflects the provision for $15.685 billion (Apple Inc., 2016 p.39) and as part of the accounts payable in the balance sheet.
Apple Inc. (2016, October 14). Investor.apple.com. Retrieved from Earnings Releases and 10_x001e_K Annual Reports: http://files.shareholder.com/downloads/AAPL/4245329713x0x913905/66363059-7FB6-4710-B4A5-7ABFA14CF5E6/10-K_2016_9.24.2016_-_as_filed.pdf
IAS. (2017). IAS 38 Intangible Assets. Retrieved from Ias plus: https://www.iasplus.com/en/standards/ias/ias38
IFRS. (2017). IAS 16 Property, Plant and Equipment. Retrieved from ifrs.org: http://www.ifrs.org/Documents/IAS16.pdf
Investopedia. (2017). Tax Expense. Retrieved from Investopedia: http://www.investopedia.com/terms/t/tax-expense.asp
Kaplan Financial Limited. (2012). Chapter 6: Accruals and prepayments. Retrieved from Kaplan Knowledge Bank: http://kfknowledgebank.kaplan.co.uk/KFKB/Wiki%20Pages/Acca%20F3%20Chapter%206%20v2.aspx
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