Essay About Impact Of Income Taxes And Financial Statements

Microsoft Corporation – Financial Statements and Supplementary Data
Microsoft CaseAnswer the following questions using the financial statements below.What is the amount charged as an expense during 2012 relating to stock options granted to employees (ignore the impact of income taxes)?  Which accounts are impacted by this transaction?$2244 – Stock based compensation expenseWhat is the net amount of gains/losses incurred during 2012 that have not been recorded in the income statement for that year?($441) – “Other Comprehensive Income” (On Equity Statement)How much did the company spend to acquire it common stock during 2012?$1,714 + $2,918 = $4,632MM (On Equity Statement)Explain the impact the of repurchasing its common stock had on Return on Equity (“ROE”) during 2012, cite the company’s 2012 ROE and calculate ROE assuming the common did not make these purchases during 2012.Net Income / Shareholder Equity = ROE So, if shareholder’s equity goes up (as it would w/out repurchase), the ROE would decrease.MICROSOFT CORPORATIONFINANCIAL STATEMENTS AND SUPPLEMENTARY DATAINCOME STATEMENTS  (In millions, except per share amounts)            Year Ended June 30,  2012  2011  2010 Revenue  $  73,723   $  69,943   $  62,484  Operating expenses:             Cost of revenue   17,530    15,577    12,395  Research and development   9,811    9,043    8,714  Sales and marketing   13,857    13,940    13,214  General and administrative   4,569    4,222    4,063  Goodwill impairment   6,193    0    0            Total operating expenses   51,960    42,782    38,386            Operating income   21,763    27,161    24,098  Other income   504    910    915            Income before income taxes   22,267    28,071    25,013  Provision for income taxes   5,289    4,921    6,253            Net income  $16,978   $23,150   $18,760                Earnings per share:             Basic  $2.02   $2.73   $2.13  Diluted  $2.00   $2.69   $2.10  Weighted average shares outstanding:             Basic   8,396    8,490    8,813  Diluted   8,506    8,593    8,927  Cash dividends declared per common share  $0.80   $0.64   $0.52