Accounting Class

The types of property, plant, and equipment owned by Edgar Filing: Microsoft Corporation are Windows XP, computers, Microsoft programs, and uninterrupted power supplies. According to the company’s balance sheet report as at 31^st March 2012, the investment in property, plant, and equipment increased. This is due to the fact that the value of the investment increased from $8,162 to $8,225 as at 31^st March 2011 and 31^st March 2012 respectively.

During this year the company recorded a depreciation of $10,952. This depreciation is calculated using the reducing balance method. Besides, the company has set a useful-life of 13 years for its intangible assets such as the good-will. On the other hand, the corporation has set 15 years for its primarily marketing-related products such as the trade name. The technology-based intangibles have been given a useful life of 5 years.

This choice is not reasonable due to the fact that products that are associated to information and technology should not be given longer useful life, because their value depreciates at a faster rate as a result of rapid technological changes. Therefore, the computer consumables and other information technology related products should be given a shorter useful life. The most appropriate useful life should be between 3 to 4 years.

Indeed, the company has intangible assets such as goodwill, patents, and copyright. During the first quarter of 2012 financial year, the company’s goodwill stood at $19,698 while other net intangible assets were $2,756. The corporation’s intangible assets, such as the good-will are amortized over a period of 13 years.

The Microsoft Company has been organized as a corporation. This is due to the fact that it has both stockholders and equity-holders. The equity and stock are traded in the stock and security markets. Therefore, it is evidenced that the ownership of the company is vested in the hands of several stockholders. Besides, the accounting records of the company are audited for publication by an Independent Registered Public Accounting Firm, and publicized.

The company has common stocks, which are categorized as either basic or diluted. On the other hand, the weighted average outstanding shares are 8,401 and 8,498 for the basic and diluted shares respectively, during the first quarter of 2012 financial report. A total of 24,000 common stocks and paid-in capital shares were authorized during the same financial year. The outstanding common stock and paid-in capital shares stood at 8,400 on 31^st March, 2012. Moreover, 1,091 common stocks were issued as at 31^st March, 2012.  

The company’s authorized and paid earnings per share are $0.61 and $0.60 for the basic and diluted classes of shares, respectively. The dividends for this year increased, as compared to those of the previous year. The dividends for the current year were more than that of 31^st March, 2011 by $334. The common stock cash dividends paid were $1,683 on 31^st March, 2012; while the dividends paid on 31^st March, 2011 were $1,349. However, it is important to note that the dividends declared by the company’s board of directors are likely to decrease on May 7, 2012 as compared to  February 16, 2012. This is because the declared dividends for May 17, 2012 is $1,680, while $1,683 was declared for February 16, 2012

The company’s management stated that the decrease in the declared dividends was attributed to the reduction in the yields of the company’s fixed investment incomes, which had to be offset by some of the high balances of the portfolio investments. The decrease can as well be attributed to the increase in the interest income, which came as a result of the increased issuance of the previous year’s debts.

Conclusion

In sum, it was not easy to interpret the whole financial statement of the company. This was due to the fact that some calculations were not shown. For example, the figures on the accumulated depreciation on property and equipment were just presented without notes for calculations. The company can improve its financial reporting by attaching notes to show the calculations on taxes, depreciation, and accounts receivables among others to make the interpretation easier