6. One of the lessons of chapter 10 and 11 are that research and development is expensed. A hypothetical alternative (not allowed under generally accepted accounting principles) is to amortize over five years. Indicate the R&D for each of the past five years, including 2019, the total amount, as well as the average. The 2019 annual report will give you information for the past 3 years. Go to the 2016 annual report to get data for 2015 and 2016.

2019: 16,876

2018: 14,726

2017: 13,037

2016: 11,988

2015: 12,046

7. What would income before taxes be if Microsoft amortized R&D over 5 years (use the average you calculated above) rather than immediate expensing?

$46,829.4

8. How much higher and lower would income before taxes be? Also indicate percentage difference.

7.19% higher

pls check the answer of question 5 6 7 and 8.

Answer to first 5 parts of the question: 1) What was Microsoft's 2019 revenue? $125,843 millions 2) What was Microsoft's 2019 research and development expense? $16,876 millions 3) What was Income before taxes? $43,688 millions 4) What was R&D as a percentage of sales? 25.54% [R&D Exps. / Sales = $16876 / $66069] 5) What was R&D as a percentage of income before taxes? 38.63% [R&D Exps. / Income before taxes = $16876/ $43688] FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INCOME STATEMENTS (in millions, except per share amounts) 2019 2018 2017 $ 66.069 59,774 (125,843 64,497 45,863 110,360 $ 63,811 32,760 96,571 Year Ended June 30, Revenue Product Service and other (Total revenue Cost of revenue: Product Service and other Total cost of revenue Gross marcin Research and development Sales and marketing General and administrative Restructuring Operating income Other income, net Income before income taxes Provision for income taxes 16,273 26,637 42,910 82.933 16,876 18,213 4,885 15,420 22,933 38,353 72,007 14,726 17.469 4,754 ) 15,175 19,086 34,261 62,310 13,037 15,461 4,481 306 29,025 876 29,901 4,412 42,959 729 43,688 4,448 35,058 1,416 36,474 19,903 Answer to first 5 parts of the question: 1) What was Microsoft's 2019 revenue? $125,843 millions 2) What was Microsoft's 2019 research and development expense? $16,876 millions 3) What was Income before taxes? $43,688 millions 4) What was R&D as a percentage of sales? 25.54% [R&D Exps. / Sales = $16876 / $66069] 5) What was R&D as a percentage of income before taxes? 38.63% [R&D Exps. / Income before taxes = $16876/ $43688] FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INCOME STATEMENTS (in millions, except per share amounts) 2019 2018 2017 $ 66.069 59,774 (125,843 64,497 45,863 110,360 $ 63,811 32,760 96,571 Year Ended June 30, Revenue Product Service and other (Total revenue Cost of revenue: Product Service and other Total cost of revenue Gross marcin Research and development Sales and marketing General and administrative Restructuring Operating income Other income, net Income before income taxes Provision for income taxes 16,273 26,637 42,910 82.933 16,876 18,213 4,885 15,420 22,933 38,353 72,007 14,726 17.469 4,754 ) 15,175 19,086 34,261 62,310 13,037 15,461 4,481 306 29,025 876 29,901 4,412 42,959 729 43,688 4,448 35,058 1,416 36,474 19,903