Microsoft 2010 Annual Report Download - page 61

Download and view the complete annual report

Please find page 61 of the 2010 Microsoft annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 80

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80

60
The aggregate changes in the balance of unrecognized tax benefits were as follows:
(In millions)
Y
ear Ended June 30, 2010
2009 2008
Balance, beginning of year $ 5,403
$ 3,195 $ 7,076
Decreases related to settlements (57 )
(82) (4,787)
Increases for tax positions related to the current year 1,012
2,203 934
Increases for tax positions related to prior years 364
239 66
Decreases for tax positions related to prior years (166 )
(132) (80)
Reductions due to lapsed statute of limitations (14 )
(20) (14)
Balance, end of year $6,542
$ 5,403 $ 3,195
We are under audit by the IRS for the tax years 2004-2006. We do not believe it is reasonably possible that the total
amount of unrecognized tax benefits will significantly increase or decrease within the next 12 months as we do not
believe the examination will be concluded within the next 12 months.
We are subject to income tax in many jurisdictions outside the U.S., and certain jurisdictions are under audit by local
tax authorities. The resolutions of these audits are not expected to be material to our financial statements.
NOTE 14 — UNEARNED REVENUE
Unearned revenue comprises mainly unearned revenue from volume licensing programs, as well as payments for
undelivered elements and for other offerings for which we earn the revenue when we provide the service or software
or otherwise meet the revenue recognition criteria.
Volume Licensing Programs
Unearned revenue from volume licensing programs represents customer billings for multi-year licensing
arrangements paid either at inception of the agreement or annually at the beginning of each billing coverage period
and accounted for as subscriptions with revenue recognized ratably over the billing coverage period.
Undelivered Elements
Undelivered elements consist mainly of payments for unspecified upgrades or enhancements of Microsoft Internet
Explorer on a when-and-if-available basis for Windows XP, and technology guarantee programs.
Other
Also included in unearned revenue are payments for post-delivery support and consulting services to be performed in
the future; Xbox LIVE subscriptions; Microsoft Dynamics business solutions products; and other offerings for which
we have been paid in advance and earn the revenue when we provide the service or software, or otherwise meet the
revenue recognition criteria.
The components of unearned revenue were as follows:
(In millions)
June 30, 2010 2009
Volume licensing programs $ 12,180 $ 11,350
Undelivered elements 624 1,083
Other 2,026 1,851
Total $ 14,830 $ 14,284