Write a preliminary analysis of Apple Computer, Inc. In Part A of your report, you should address the company’s business and the economic environment in which it operates. In Part B, you should address Apple’s financial reporting policies, practices, and procedures. (Subsequent assignments will require detailed analyses of the financial statements; therefore, do not analyze the numbers in this report.) Your Activity responses should be both grammatically and mechanically correct and formatted in the same fashion as the Activity itself. If there is a Part A, your response should identify a Part A, etc. In addition, you must appropriately cite all resources used in your response and document them in a bibliography using APA style. (100 points) (A 5-page response is required.)

Part A To assist you in addressing this topic, you should consider the following points. (50 points)

1. Determine Apple’s business, as identified by the company.

2. Discuss economic conditions from 1999 through 2002.

3. Discuss five (5) trends in the personal computer industry.

Part B Analyze Apple’s financial reporting practices, policies, and procedures by addressing the following points. (50 points)

1. Verify that Apple reports on a consolidated basis by citing at least two (2) sources supporting that management assertion.

2. Discuss how the company accounts for its short-term investments and the effect on unrealized gains and losses on income.

3. Explain how non-hedge derivative instruments are valued on the balance sheet and their impact on income.

4. Determine whether Apple carries only finished goods inventory or raw materials and work in process inventories as well as finished goods. Discuss the company’s inventory costing method.

5. Explain whether the company’s functional currency for foreign subsidiaries is the U.S. dollar or the currency of the foreign subsidiaries.

6. Discuss the extent to which Apple has a defined benefit pension plan.

7. Determine whether the company charges stock options against revenues in the income statement or discloses their cost on a pro-forma basis.

8. Categorize the independent auditor’s report.

9. Determine when Apple recognizes revenues and discuss a strategy for assessing whether its revenue recognition policy is comparable to industry standards