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Us gaap expense recognition8/3/2023 The VSOE of fair value for upcoming new products are based on the price determined by management having the relevant authority when the element is not yet sold separately, but is expected to be sold in the near future at the price set by management. ![]() The revenue allocation is based on the vendor-specific objective evidence (“VSOE”) of fair value of the products. Revenue is allocated between the existing product and the new product, and revenue allocated to the new product is deferred until that version is delivered. Technology guarantee programs are accounted for as multiple element arrangements as customers receive free or significantly discounted rights to use upcoming new versions of a software product if they license existing versions of the product during the eligibility period. Revenue for retail packaged products, products licensed to original equipment manufacturers (“OEMs”), and perpetual licenses under certain volume licensing programs generally is recognized as products are shipped or made available. Revenue generally is recognized net of allowances for returns and any taxes collected from customers and subsequently remitted to governmental authorities. Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collectibility is probable. Translation adjustments resulting from this process are recorded to other comprehensive income (“OCI”). Revenue and expenses are translated at average rates of exchange prevailing during the year. Foreign CurrenciesĪssets and liabilities recorded in foreign currencies are translated at the exchange rate on the balance sheet date. Actual results and outcomes may differ from management’s estimates and assumptions. ![]() Examples of assumptions include: the elements comprising a software arrangement, including the distinction between upgrades or enhancements and new products when technological feasibility is achieved for our products the potential outcome of future tax consequences of events that have been recognized in our financial statements or tax returns and determining when investment impairments are other-than-temporary. ![]() Examples of estimates include: loss contingencies product warranties the fair value of, and/or potential goodwill impairment for, our reporting units product life cycles useful lives of our tangible and intangible assets allowances for doubtful accounts allowances for product returns the market value of our inventory and stock-based compensation forfeiture rates. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Investments through which we are not able to exercise significant influence over the investee and which do not have readily determinable fair values are accounted for under the cost method. Equity investments through which we exercise significant influence over but do not control the investee and are not the primary beneficiary of the investee’s activities are accounted for using the equity method. ![]() Intercompany transactions and balances have been eliminated. The financial statements include the accounts of Microsoft Corporation and its subsidiaries. The financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. Note 1 - Accounting Policies Accounting Principles
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