Microsoft 2015 Annual Report Download - page 52

Download and view the complete annual report

Please find page 52 of the 2015 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 89

  • 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
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89

51
Goodwill
Goodwill is tested for impairment at the reporting unit level (operating segment or one level below an operating
segment) on an annual basis (May 1 for us) and between annual tests if an event occurs or circumstances change
that would more likely than not reduce the fair value of a reporting unit below its carrying value.
Intangible Assets
All of our intangible assets are subject to amortization and are amortized using the straight-line method over their
estimated period of benefit, ranging from one to 15 years. We evaluate the recoverability of intangible assets
periodically by taking into account events or circumstances that may warrant revised estimates of useful lives or that
indicate the asset may be impaired.
Recent Accounting Guidance Not Yet Adopted
In May 2014, as part of its ongoing efforts to assist in the convergence of U.S. GAAP and International Financial
Reporting Standards, the Financial Accounting Standards Board (“FASB”) issued a new standard related to revenue
recognition. Under the new standard, recognition of revenue occurs when a customer obtains control of promised
goods or services in an amount that reflects the consideration which the entity expects to receive in exchange for
those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty
of revenue and cash flows arising from contracts with customers. The new standard will be effective for us beginning
July 1, 2018, and adoption as of the original effective date of July 1, 2017 is permitted. We anticipate this standard
will have a material impact on our consolidated financial statements, and we are currently evaluating its impact.
NOTE 2 — EARNINGS PER SHARE
Basic earnings per share (“EPS”) is computed based on the weighted average number of shares of common stock
outstanding during the period. Diluted EPS is computed based on the weighted average number of shares of
common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury
stock method. Dilutive potential common shares include outstanding stock options and stock awards.
The components of basic and diluted EPS were as follows:
(In millions, except earnings per share)
Y
ear Ended June 30, 2015
2014 2013
Net income available for common shareholders (A) $ 12,193 $ 22,074 $ 21,863
Weighted average outstanding shares of common stock (B) 8,177 8,299 8,375
Dilutive effect of stock-based awards 77 100 95
Common stock and common stock equivalents (C) 8,254 8,399 8,470
Earnings Per Share
Basic (A/B) $1.49 $ 2.66 $2.61
Diluted (A/C) $1.48 $ 2.63 $2.58
Anti-dilutive stock-based awards excluded from the calculations of diluted EPS were immaterial during the periods
presented.