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Reformulation : An Illustration of Microsoft

Reformulation : An Illustration of Microsoft. Di (Wendy) Wang. Enterprise vs. Financing Activities. Reformulation of Balance Sheet. Assumptions and Justification. Assumptions and Justification-cont. Adjustment of Deferred Income Tax Assets/Liability. Split →. NEA=$9,646. Split →.

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Reformulation : An Illustration of Microsoft

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  1. Reformulation : An Illustration of Microsoft Di (Wendy) Wang

  2. Enterprise vs. Financing Activities

  3. Reformulation of Balance Sheet

  4. Assumptions and Justification

  5. Assumptions and Justification-cont.

  6. Adjustment of Deferred Income Tax Assets/Liability

  7. Split→ NEA=$9,646 Split→

  8. Computation of NEA

  9. Split→ NFA=$69,298 Split→ Split→

  10. Computation of NFA

  11. Check Our Work • If we have correctly reformulated the balance sheet to separate the reported information on enterprises operations and financing activities, we will not have changed the amount of common shareholders’ equity.

  12. CSE=$78,944

  13. The common shareholders’ equity

  14. After the reformulation, we show that

  15. Reformulation of Income Statement

  16. Assumptions and Justification

  17. Adjustment of Other Income Financing Activities Enterprise Operations

  18. Adjustment of Income Tax: • Income Tax Rate Assumed to be 37%

  19. Adjustment of Income Tax: • Income Tax Rate Assumed to be 37%

  20. Split→ Split→ EPAT=$21,592

  21. Computation of EPAT

  22. Split→ FPAT=$592 Split→ Split→ Split→

  23. Computation of FPAT

  24. Check Our Work • If we have correctly reformulated the income statement to separate the reported information on enterprise operations and financing activities, we will not have changed the amount of comprehensive income.

  25. Comprehensive income

  26. After the reformulation, we show that

  27. Sources: • Microsoft Form10-K For the Fiscal Year Ended June 30, 2011 • http://apps.shareholder.com/sec/viewerContent.aspx?companyid=MSFT&docid=8062497 • Microsoft Form10-K For the Fiscal Year Ended June 30, 2012 • http://apps.shareholder.com/sec/viewerContent.aspx?companyid=MSFT&docid=8733512 • Microsoft Form10-K For the Fiscal Year Ended June 30, 2013 • http://apps.shareholder.com/sec/viewerContent.aspx?companyid=MSFT&docid=9422625

  28. THANK YOU!

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