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Microsoft Accounting Strategy

Microsoft’s Financial Reporting Strategy
The case at hand is primarily to discuss the financial reporting strategy adopted by Microsoft Inc. for the period 1996-1999 and the subsequent litigation that arose out of the accounting practice followed by Microsoft.
Microsoft’s primary operations has been developing and manufacturing of the software products. As a company, it has shown a very stable growth in terms of revenues and profits, thus enabling better than industry share price increase over more than a decade (1986-1999). With respect to the primary operation of software development and the task to financial reporting the two areas that were required to be established were –
a) Treatment of Software Development costs.
b) Revenue recognition policy.
As per the statement (SFAS no 86)issued by Financial Accounting Standards board (FASB) in 1985, the cost that is incurred for the research and development of software is to be considered as “expense” till the work......


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Approximate Word Count: 1057
Approximate Pages: 5 (250 words per double-spaced page)

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