• Microsoft Corporation implemented a new revenue recognition standard, resulting in $2 billion more revenue recognized compared to the previous standard. The company reported the following financial figures:
  • Revenue under Previous Standard: $40 billion
  • Operating Income: $15 billion
  • Total Assets: $300 billion
  • Total Liabilities: $150 billion

• Requirements:
  1. Calculate Microsoft's revenue under the new revenue recognition standard.
  2. Prepare a comparative income statement showing the impact of the new revenue recognition standard on operating income.
  3. Analyze the impact of the new revenue recognition standard on Microsoft's gross profit margin and operating margin.
  4. Discuss the rationale behind implementing the new revenue recognition standard and its impact on financial reporting.
  5. Evaluate the disclosure requirements for the new revenue recognition standard in Microsoft's financial statements.