The case titled ‘Microsoft: does classification matter’ highlights the issue of balance sheet classification, consistency of management financial reporting as well as the alignment of business activities. Microsoft is one of the largest information technology products and service providing company which is famously managed and controlled by Bill Gates.
The case provides how Microsoft files for reclassification in 1999 specific to its 10-k. The research seeks to identify the relationship of classification and GAAP and how the Gap addresses the issue of reclassification. The objectives of the case research pertain to determining the classification of the revenue and related costs are affected by the business strategy and the operating system in place.
The case research seeks to derive solutions for the research questions as highlighted above. The solutions provide that the reclassification was needed by the company in order to getter represent its diverse business in its balance sheet, and that the relationship of the business strategy and the classification of the balance sheet was strengthened by Microsoft by making the balance sheet more reflective of the business strategy and operations.
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