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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Reporting investments

Group Project

In groups of three or four, find the latest annual report for Microsoft Corporation. The annual report can be found on the company’s website at www.microsoft.com/msft/default.mspx.

The notes to the financial statements include details of Microsoft's investments. Find the notes that provide details of its investments (Note 4) and the income from its investments (Note 3).

From these disclosures, answer the following questions:

1. What is the total cost of investments?

2. What is the fair value (recorded value) of investments?

3. What is the total unrealized gain from investments?

4. What is the total unrealized loss from investments?

5. What percent of total investments (at fair value) are:

  1. a. Cash and equivalents?
  2. b. Short-term investments?
  3. c. Equity and other investments (long term)?

6. What was the total combined dividend and interest revenue?

7. What was the recognized net gain or loss from sale of investments?

To determine

Investment: The act of allocating money to buy a monetary asset, in order to generate wealth in the future is referred to as investment.

To find: The details of investments from the disclosures given in Notes 3 and 4 of Corporation M

Explanation

(1)

The total cost of investments as on June 30, 2015 was $103,647,000,000.

(2)

The fair value of investments (termed as recorded basis) as on June 30, 2015 was $108,554,000,000.

(3)

The total unrealized gain from investments as on June 30, 2015 was $5,220,000,000.

(4)

The total unrealized losses from investments as on June 30, 2015 was $(313,000,000).

(5)

(a)

Compute percentage of cash and cash equivalents in total investments (recorded basis) as on June 30, 2015.

Percentage of cash and cash equivalents} = Cash and cash equivalents on June 30, 2015Fair value of investments×100 =$5,595,000,000$108,554,000,000×100=5.2%

(b)

Compute percentage of short-term investments in total investments (recorded basis) as on June 30, 2015

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