What journal entry will apple make

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Reference no: EM132953237

Do you own an iPhone? Did you own one a few years ago? Did your iPhone ever suddenly power off or did you later feel like your iPhone performance slowed way down following an iOS update? If you answered yes to any of these questions you may be familiar with the "Batterygate" scandal that has unfolded for Apple over the past several years. When iPhone batteries were not performing up to par, Apple tried to slap a software solution (an iOS update) on a hardware issue; they purposefully slowed down iPhones with the update to attempt to make the old battery not cause the iPhone to crash. Long story short, many people thought they needed to buy an entire new iPhone, when they really just needed a cheap battery replacement... This timeline outlines how the "Batterygate" scandal was uncovered. You can also read more here. We are going to dive into the story of the Batterygate scandal and how it unfolded in their financial statements. When did Apple start to note the 59+ class action lawsuits that resulted from this scandal? When and for how much should they have started estimating the contingency loss from this scandal?

Although the problem clearly began unfolding in 2017, it did not specifically appear in the company's 10k with its own footnote until 2018.

Problem 1) 2017: Apple estimates with a "remote" probability that they will have to pay something for this issue. What is the journal entry Apple would make in 2017 when the scandal started evolving related to their expected loss?

Problem 2) 2018: This year 59 lawsuits are filed against Apple! Apple still estimates with a "remote" probability that they will have to pay something for this issue. What journal entry will Apple make in 2018?

Reference no: EM132953237

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