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Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collectibility is probable . .

Revenue is recognized when persuasive evidence of an arrangement exists, delivery has

occurred, the fee is fixed or determinable, and collectibility is probable . . . . Revenue

for retail packaged products, products licensed to original equipment manufacturers

(OEMs) . . . generally is recognized as products are shipped or made available. . . .

Certain multi-year licensing arrangements include a perpetual license for current

products combined with rights to receive future versions of software products on a

when-and-if-available basis and are accounted for as subscriptions, with billings

recorded as unearned revenue and recognized as revenue ratably over the billing

coverage period... . Revenue related to our Xbox 360 gaming and entertainment

console, Kinect for Xbox 360, games published by us, and other hardware

components is generally recognized when ownership is transferred to the resellers.

Revenue related to games published by third parties for use on the Xbox 360 platform

is recognized when games are manufactured by the game publishers. Display

advertising revenue is recognized as advertisements are displayed. Search advertising

revenue is recognized when the ad appears in the search results or when the action

necessary to earn the revenue has been completed. Consulting services revenue is

recognized as services are rendered, generally based on the negotiated hourly rate in

the consulting arrangement and the number of hours worked during the period.

1. How does Microsoft's revenue recognition policy meets the criteria of being earned and

realized.

2. What would be the accounting for multiyear licensing arrangements.

3. What would be the accounting for revenue related to games published by third parties.

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