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1. Read Note 2 from the 2009 Apples 10-K/A (see below), for each balance sheet item adjusted, explain why the adjustment was necessary. Hint: Other current assets and other assets include the pro rata cost of products (such as the iPhone) that were sold but for which revenue was deferred. Accrued expenses and other non-current liabilities include current and non-current portion of warranty accruals, respectively.
2. What was the cash flow effect of the new revenue recognition principle?

The following table present the effects of the retrospective adoption of the new accounting principles to the Company's previously reported financial statements as of September 26, 2009:

\begin{tabular}{|c|c|c|c|c|c|c|} \hline \multirow{3}{*}{\begin{tabular}{l} Consolidated Balance Sheets \\ (in millions, except share amounts) \\ Current assets: \end{tabular}} & \multicolumn{6}{|c|}{ September 26, 2009} \\ \hline & \multicolumn{2}{|c|}{ As Reported } & \multicolumn{2}{|c|}{ Adjustments } & \multicolumn{2}{|c|}{ As Amended } \\ \hline & & & & & & \\ \hline Cash and cash equivalents & $ & 5,263 & $ & & $ & 5,263 \\ \hline Short-term marketable securities & & 18,201 & & - & & 18,201 \\ \hline Accounts receivable, less allowance of $52 & & 3,361 & & - & & 3,361 \\ \hline Inventories & & 455 & & - & & 455 \\ \hline Deferred tax assets & & 2,101 & & (966) & & 1,135 \\ \hline Other current assets & & 6,884 & & (3,744) & & 3,140 \\ \hline Total current assets & & 36,265 & & (4,710) & & 31,555 \\ \hline Long-term marketable securities & & 10,528 & & - & & 10,528 \\ \hline Property, plant and equipment, net & & 2,954 & & & & 2,954 \\ \hline Goodwill & & 206 & & - & & 206 \\ \hline Acquired intangible assets, net & & 247 & & - & & 247 \\ \hline Other assets & & 3,651 & & (1,640) & & 2,011 \\ \hline Total assets & $ & 53,851 & $ & (6,350) & $ & 47,501 \\ \hline \multicolumn{7}{|l|}{ Current liabilities: } \\ \hline Accounts payable & $ & 5,601 & $ & - & $ & 5,601 \\ \hline Accrued expenses & & 3,376 & & 476 & & 3,852 \\ \hline Deferred revenue & & 10,305 & & (8,252) & & 2,053 \\ \hline Total current liabilities & & 19,282 & & (7,776) & & 11,506 \\ \hline Deferred revenue - non-current & & 4,485 & & (3,632) & & 853 \\ \hline Other non-current liabilities & & 2,252 & & 1,250 & & 3,502 \\ \hline Total liabilities & & 26,019 & & (10,158) & & 15,861 \\ \hline \multicolumn{7}{|l|}{ Commitments and contingencies } \\ \hline \multicolumn{7}{|l|}{ Shareholders' equity: } \\ \hline \begin{tabular}{l} Common stock, no par value; 1,800,000,000 shares \\ authorized; 899,805,500 shares issued and outstanding \end{tabular} & & 8,210 & & - & & 8,210 \\ \hline Retained earnings & & 19,538 & & 3,815 & & 23,353 \\ \hline Accumulated other comprehensive income & & 84 & & (7) & & 77 \\ \hline Total shareholders' equity & & 27,832 & & 3,808 & & 31,640 \\ \hline Total liabilities and shareholders' equity & $ & 53,851 & $ & (6,350) & $ & 47,501 \\ \hline \end{tabular}

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