a) What is the journal entry to record deferred or unearned revenue? What is the total amount of unearned revenue that is deferred from being recognized in income for FY2015? 

 

b) What is the journal entry when the revenue is earned? What is the total amount of unearned revenue that is recognized for FY2015?

c) Discuss how unearned revenue accounts could potentially be used for earnings management.

Unearned revenue at June 30, 2015 was comprised mainly of unearned revenue from volume licensing programs. Unearned revenue from volume licensing programs represents customer billings for multi-year licensing arrangements paid for either at inception of the agreement or annually at the beginning of each coverage period and accounted for as subscriptions with revenue recognized ratably over the coverage period. Unearned revenue at June 30, 2015 also included payments for: post-delivery support and consulting services to be performed in the future; Xbox Live subscriptions and prepaid points; Microsoft Dynamics business solutions products; Office 365 subscriptions; Skype prepaid credits and subscriptions; Bundled Offerings; and other offerings for which we have been paid in advance and earn the revenue when we provide the service or software, or otherwise meet the revenue recognition criteria. The following table outlines the expected future recognition of unearned revenue as of June 30, 2015: (In millions) Three Months Ending, September 30, 2015 December 31, 2015 March 31, 2016 June 30, 2016 Thereafter 2$ 8,889 7,172 4,848 2,314 2,095 Total $ 25,318