Class - for the following assignment, you will use the Microsoft 10K to answer questions where directed. It is important that you are versed in the 10K meaning you should read or skim through THE ENTIRE REPORT carefully so that you can find the information be requested. YOU MUST REPEAT THE QUESTIONS LISTED BELOW (CUT AND PASTE) IN YOUR ANSWER SHEET. I don't mind if you work together but remember that the below will be repeated on the midterm and final where teamwork is not allowed. Contact me with any questions. 1a. What does "above the line" vs. "below the line mean"? Why is it an important distinction (and for whom)? Minimum of 100 words. 1b. Using the MSFT financial statements: What are the components of "above the line" and "below the line" (hint: it is not just accounts but also totals and/or subtotals) for 2018 and 2017? 1c. Interpret the results of 2018 "above the line" compared to 2017 "above the line" and then 2017 "below the line" and 2017 "below the line". Use totals where you can so this is high level. I don't want a comparison of account by account, line by line. 150 words MAX. 2a. Summarize the revenue and cost streams of MSFT using the 10K. Specifically note how costs are allocated between the product and service streams. 150 words minimum. 2b. Summarize the revenue recognition policy of MSFT. SUMMARIZE IN YOUR OWN WORDS. DO NOT COPY FROM THE REPORT. 100 words MAX. 2c. Give examples of the revenue recognition for each area as mentioned in the report. This will require using some imagination and your general or learned knowledge about MSFT. The purpose is to see if you really understand the principle and application of revenue recognition. Mention words like transfer of title or ownership and compare to payment. Give it your best shot. 200 words minimum 3. Calculate EBIT and EBITDA for MSFT for 2018 and 2017 Detail the calculation don't just give me an total answer. 4. Using the MSFT financial statements, calculate the variance for the balances listed below (some are clearly stated and some you might have to calculate). The answer must include: \% change from 2017 to 2018 $ change from 2017 to 2018 you must state whether it is a favorable or unfavorable variance from 2017 to 2018 Cost of services Selling, general, administration and other Gross Profit of services Gross Profit of products 5. Here is the ; Go to the financial statements and provide for me the balance of total deferred revenue different line items and accounts and sub totals. Emphasizing the important point, you must understand the terms, not just memorize them). 4a. Explain in your own words, what is in the balance of deferred revenue (hint: refer to the footnotes of the financial statements in the Microsoft 10K. Class - for the following assignment, you will use the Microsoft 10K to answer questions where directed. It is important that you are versed in the 10K meaning you should read or skim through THE ENTIRE REPORT carefully so that you can find the information be requested. YOU MUST REPEAT THE QUESTIONS LISTED BELOW (CUT AND PASTE) IN YOUR ANSWER SHEET. I don't mind if you work together but remember that the below will be repeated on the midterm and final where teamwork is not allowed. Contact me with any questions. 1a. What does "above the line" vs. "below the line mean"? Why is it an important distinction (and for whom)? Minimum of 100 words. 1b. Using the MSFT financial statements: What are the components of "above the line" and "below the line" (hint: it is not just accounts but also totals and/or subtotals) for 2018 and 2017? 1c. Interpret the results of 2018 "above the line" compared to 2017 "above the line" and then 2017 "below the line" and 2017 "below the line". Use totals where you can so this is high level. I don't want a comparison of account by account, line by line. 150 words MAX. 2a. Summarize the revenue and cost streams of MSFT using the 10K. Specifically note how costs are allocated between the product and service streams. 150 words minimum. 2b. Summarize the revenue recognition policy of MSFT. SUMMARIZE IN YOUR OWN WORDS. DO NOT COPY FROM THE REPORT. 100 words MAX. 2c. Give examples of the revenue recognition for each area as mentioned in the report. This will require using some imagination and your general or learned knowledge about MSFT. The purpose is to see if you really understand the principle and application of revenue recognition. Mention words like transfer of title or ownership and compare to payment. Give it your best shot. 200 words minimum 3. Calculate EBIT and EBITDA for MSFT for 2018 and 2017 Detail the calculation don't just give me an total answer. 4. Using the MSFT financial statements, calculate the variance for the balances listed below (some are clearly stated and some you might have to calculate). The answer must include: \% change from 2017 to 2018 $ change from 2017 to 2018 you must state whether it is a favorable or unfavorable variance from 2017 to 2018 Cost of services Selling, general, administration and other Gross Profit of services Gross Profit of products 5. Here is the ; Go to the financial statements and provide for me the balance of total deferred revenue different line items and accounts and sub totals. Emphasizing the important point, you must understand the terms, not just memorize them). 4a. Explain in your own words, what is in the balance of deferred revenue (hint: refer to the footnotes of the financial statements in the Microsoft 10K
