In: Business and Management

Submitted By leparsdon
Words 1196
Pages 5
Microsoft Corporation develops, licenses, markets, and supports software, services, and devices worldwide. The company’s Devices and Consumer (D&C) Licensing segment licenses Windows operating system; Microsoft Office; and Windows Phone operating system. Its Computing and Gaming Hardware segment provides Xbox entertainment consoles and accessories, Xbox Live subscriptions; surface devices and accessories; and Microsoft PC accessories. The company’s phone hardware segment offers Lumia Smartphones and as well as a few others. Its D&C Other segment provides Windows Store, Xbox Live transactions, and Windows Phone Store; search advertising; display advertising; Office 365 Home and Office 365. These are just a few of the many segments Microsoft owns. The company markets and distributes its products through original equipment manufacturers, distributors, and resellers, as well as online. Microsoft Corporation was founded in 1975 and is based in Washington.
In Microsoft’s 2014 10-k, under Note 1 talks about their accounting policies. More specifically, the section on revenue recognition. What was interesting was how Microsoft as well as many other technology companies under US GAAP allowing to recognize revenue on multiple items in the bundle rather than the bundle itself. This practice known as vendor-specific objective evidence or (VSOE) allows Microsoft to split the fee amongst the products and the related elements. This allows Microsoft to sell their hardware, software licenses, and support contracts recognizing the revenue of the hardware on delivery, and the support or software license on the fulfillment time that contract was related.
In the section below are important ratios of liquidity, profitability, and solvency ratios of Microsoft. With those ratios are explanations of significant changes from 2013 to 2014 and why each ratio is important. Attached as…...

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