What does it mean when Microsoft's Unearned Revenue liability account on the balance sheet grow? What does
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Question:
- What does it mean when Microsoft's Unearned Revenue liability account on the balance sheet grow? What does it mean when they shrink?
- Explain the adjustments for "Deferral of unearned revenue" and "Recognition of unearned revenue" included in the operating section of the statement of cash flows. Specifically, why is "Deferral of unearned revenue" added to net income to derive cash from operations while "Recognition of unearned revenue" is subtracted?
- If Microsoft were to recognize revenue upon the receipt of cash, what would their revenue have been in the fiscal years ended June 30, 2016 and 2017?
- Compare the reported growth rate in revenues to the growth rate from your calculated cash collections from customers in the fiscal years ended June 30, 2016 and 2017. Which is more likely to be used by investors and why?
- The new revenue recognition policy that Microsoft implemented for the fiscal year that began July 1, 2017 will force Microsoft to recognize Windows 10 revenue sooner than previously. What financial statement motives could Microsoft have had to have chosen its original Windows 10 revenue recognition policy of recognizing "revenue ratably over the estimated life of the related device"?
Related Book For
Accounting What the Numbers Mean
ISBN: 978-0078025297
10th edition
Authors: David H. Marshall, Wayne W. McManus, Daniel F. Viele
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