MICROSOFT EARNINGS MANAGEMENT

The purpose of this exercise is to develop your ability to apply the earnings management concepts that are discussed in the articles that you have been assigned. The company on which the assignment focuses is Microsoft Corporation.

Your task is as follows:

1. Review the financial statements and footnotes for Microsoft Corporation from its 2005 Annual Report.

2. Using the examples of earnings management techniques from the articles, identify at least three different ways that Microsoft used or may have the opportunity to use earnings management and explain how they could occur.

3. Be prepared to discuss your examples in class.