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TheAnalysisoftheStatementofShareholders’Equity–Chapter8p.°191M9.1. Analysis of the Equity Statement, Hidden Losses, and Off-Balance-Sheet Liabilities: Microsoft Corporation This case requires the student to reformulate and analyze Microsoft’s equity statement and then deal with the question of omitted (hidden) expenses. The accounting for these expenses (or lack of it) leads to distortions. The student discovers that many of Microsoft’s costs of acquiring expertise are not reported under GAAP. The student also understands that there are omitted liabilities for these costs and is introduced to the notion of contingent liabilities and the option overhang. The case is a little old (200) but as the advantage of covering most os the issues that arise with the statement of shareholders’ equity. Note that the accounting is not Microsoft’s fault: They are accounting according to GAAP. The Reformulated Statement of Shareholders’ Equity To get things going, reformulate the equity statement as is, without the consideration of hidden dirty-surplus items:
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