Microsoft is going to struggle to raise the US$8.5 billion it agreed to pay for Skype, the internet communications company, this week — but the deal is likely to be important in its pursuit of key rivals and could have nasty consequences for the telecommunications sector. Skype is the most expensive acquisition in Microsoft’s history . . . About 170 million people use Skype’s services every month but the vast majority are making free video calls from one computer to another . . . Skype has yet to record a profit in its seven-year history, reporting a loss of US$7 million on revenue of US$860 million in 2010.

Required
Generate a list of the factors that Microsoft would have considered in determining the price to pay for Skype. Compose a memorandum detailing how Microsoft would account for the acquisition of Skype:
a. At acquisition date
b. One year post acquisition.