Microsoft

(Since Wal-Mart doesn’t report investments activity, we will refer to Microsoft’s 2005 annual report for the case.) Locate Microsoft’s 2005 annual report at http://www.microsoft

.com to answer the following questions:

1. Find Microsoft’s note on accounting policies. Using the information in that note (under the heading “Financial Instruments”), determine what fraction of Microsoft’s investment securities are classified as “available-for-sale.”

2. In its note on “Cash and short-term investments,” Microsoft lists the general types of investments that make up its $60.592 billion portfolio. Certificates of deposit are listed both as “cash and cash equivalents” and as “short-term investments.” What is the difference between these two categories? Hint: Go back to the note you looked at to answer (1).

3. Look at Microsoft’s stockholders’ equity statement. Where in the equity section does Microsoft report the unrealized gains and losses from available-for-sale securities?