1 paragraph discussing: Revenue Recognition by Software Companies: Microsoft , Inc. recognizes…

1 paragraph discussing: Revenue Recognition by Software Companies: Microsoft , Inc. recognizes…

1 paragraph discussing:
Revenue Recognition by Software Companies:
Microsoft , Inc. recognizes revenue from its licensed software products at the “time of sale� or “time of installation.� Despite receiving such revenue in cash, Microsoft recognizes a portion of its software revenue. The deferred portion represents the value of any future software upgrades that might be distributed free of charge, as well as the value of any technical support services provided free of charge during the software warranty period. Discuss Microsoft’s revenue recognition policy. Do you agree with Microsoft’s policy choice? Discuss the company’s motivation for adopting this revenue recognition approach. Is it unambiguous when revenue is to be recognized in your own business?

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