Question

Apple Microsoft Goodwill due 2/11 Max 4 points for excellent work, 3.4 points for good work that meets expectations A. Please obtain the most recent annual reports for Microsoft and Apple. Please attach only the balance sheets, with the relevant amounts highlighted or circled (1 point). B. (2 points) Microsoft Apple . Date of Balance Sheet all dollar amounts in billions (rounded) Assets Goodwill Other Intangible Assets Total intangible assets, including goodwill Total intangibles, as a percentage of total assets C. Based on your reading of chapter 10, why do you think Microsoft has more goodwill and intangible assets than Apple? (Meets expectations 0.4 points: Excellent beyond expectations up to 1.0 points)

Answer 1

Balance Sheet Microsoft(Audited) As on 30th June, 2019 $ in billions Apple (Unaudited) As on 29th June, 2019 $ in billions Assets Current assets: Cash and cash equivalents Short-term investments 122 Total cash, cash equivalents, and short-term investments Accounts receivable, net of allowance for doubtful accounts. Inventories Other Total current assets Property and equipment, net of accumulated depreciation Operating lease right-of-use assets Equity investments Goodwill Intangible assets, net Other long-term assets Marketable Securities 116 Total assets 287 322 $ in billions $ in billions Liabilities and stockholders' equity Current liabilities: Accounts payable Term Debt Commercial Paper Current portion of long-term debt Accrued compensation Short-term income taxes


Short-term unearned revenue Other Total current liabilities Long-term debt Long-term income taxes Long-term unearned revenue Deferred income taxes Operating lease liabilities Other long-term liabilities Total liabilities 226 Commitments and contingencies Stockholders' equity: Common stock and paid-in capital Retained earnings Accumulated other comprehensive loss Total stockholders' equity Total liabilities and stockholders' equity

2. Apple has lesser/ no goodwill compared to Microsoft probably due to Impairment of Goodwill and Intangibles. Even when the Market value increases eventually, the previously recognized impairment losses can't be written back as per US GAAP.

Also, another reason for Microsoft's excess goodwill over Apple could be due to diversification of business.