: Apple changes tune on new revenue-recognition rules

Apple is singing a new song about when it will adopt new rules that will completely change how it reports its revenues.

Apple AAPL, -0.52%  slipped the change in its target date for the adoption of the new revenue recognition standard into its second-quarter earnings filing with the Securities and Exchange Commission. The company originally said in its annual report last October that it would begin reporting under the new revenue recognition standards beginning with the first quarter of its 2018 fiscal year, but then decided to push the switch back a year.

Don’t miss: A revenue rule change is coming and every company will be affected

“The Company plans to adopt the new revenue standards in its first quarter of 2019 utilizing the full retrospective adoption method,” Apple wrote in May, changing just the year from its previous disclosure.

That means the company will have to restate its fiscal 2018 results for comparison, and could restate 2017 results as well, and have the numbers re-audited. Apple continues to insist that the new revenue standards “are not expected to have a material impact on the amount and timing of revenue recognized” in its consolidated financial statements.

Apple reports its third-quarter earnings on Tuesday and may say more about the specific areas of impact its progress toward the new target date. An Apple spokesman declined to comment Monday.

See also: Apple earnings: How long will iPhone sales be on ‘pause’?

Instead of joining the ranks of early adopters like Ford Motor Co. F, +0.45%  —which was done with the change in January of 2017—and Microsoft Corp. MSFT, -0.47%  —which is adopting as of the beginning of its new fiscal year this month—Apple will now be one of the last companies to reflect the impact of the new rules.

Apple is expected to be affected by almost all of the changes, including recognition of gift-card revenue. The timing of revenue recognition from its sale of hardware products, software bundled with hardware, licenses and third-party digital content sold in the iTunes Store may change substantially.

Apple had $7.7 billion in current deferred revenue and $3.1 billion in deferred revenue that relates to transactions of more than a year old on its balance sheet as of the end of the second quarter, revenue that could be pulled onto its top line under the new standards.

Apple’s disclosures about the impact of the new accounting standard have been limited, though, which could be a problem.

“It will be interesting to see if the Securities and Exchange Commission thinks Apple’s disclosures meet the revised guidelines under SAB 74,” Professor Tony Sondhi, a member of the Financial Accounting Standards Board’s Emerging Issues Task Force, told MarketWatch.

SAB 74, issued by the SEC in September of 2016, requires disclosure of both quantitative and qualitative information about the expected impact of the new accounting standards.

Apple stock fell 0.8% Monday to $148.33, but is still up 28.1% so far this year, outperforming the 10.4% gain by the S&P 500 index and 10.8% gain by the Dow Jones Industrial Average, which includes Apple as a component.

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