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A computer is a digital electronic machine that can be programmed to carry out sequences of arithmetic or logical operations computation automatically. Modern computers can perform generic sets of operations known as programs. These programs enable computers to perform a wide range of tasks. A computer system is a “complete” computer that includes the hardware , operating system main software , and peripheral equipment needed and used for “full” operation.

This term may also refer to a group of computers that are linked and function together, such as a computer network or computer cluster. A broad range of industrial and consumer products use computers as control systems. Simple special-purpose devices like microwave ovens and remote controls are included, as are factory devices like industrial robots and computer-aided design , as well as general-purpose devices like personal computers and mobile devices like smartphones.

Computers power the Internet , which links billions of other computers and users. Early computers were meant to be used only for calculations. Simple manual instruments like the abacus have aided people in doing calculations since ancient times. Early in the Industrial Revolution , some mechanical devices were built to automate long tedious tasks, such as guiding patterns for looms. More sophisticated electrical machines did specialized analog calculations in the early 20th century.

The first digital electronic calculating machines were developed during World War II. The first semiconductor transistors in the late s were followed by the silicon -based MOSFET MOS transistor and monolithic integrated circuit IC chip technologies in the late s, leading to the microprocessor and the microcomputer revolution in the s.

The speed, power and versatility of computers have been increasing dramatically ever since then, with transistor counts increasing at a rapid pace as predicted by Moore’s law , leading to the Digital Revolution during the late 20th to early 21st centuries.

Conventionally, a modern computer consists of at least one processing element , typically a central processing unit CPU in the form of a microprocessor , along with some type of computer memory , typically semiconductor memory chips. The processing element carries out arithmetic and logical operations, and a sequencing and control unit can change the order of operations in response to stored information.

Peripheral devices include input devices keyboards, mice, joystick , etc. Peripheral devices allow information to be retrieved from an external source and they enable the result of operations to be saved and retrieved. According to the Oxford English Dictionary , the first known use of computer was in a book called The Yong Mans Gleanings by the English writer Richard Brathwait : “I haue [ sic ] read the truest computer of Times, and the best Arithmetician that euer [sic] breathed, and he reduceth thy dayes into a short number.

The word continued with the same meaning until the middle of the 20th century. During the latter part of this period women were often hired as computers because they could be paid less than their male counterparts.

The Online Etymology Dictionary gives the first attested use of computer in the s, meaning ‘one who calculates’; this is an “agent noun from compute v.

The Online Etymology Dictionary states that the use of the term to mean ” ‘calculating machine’ of any type is from Devices have been used to aid computation for thousands of years, mostly using one-to-one correspondence with fingers.

The earliest counting device was probably a form of tally stick. Later record keeping aids throughout the Fertile Crescent included calculi clay spheres, cones, etc. The abacus was initially used for arithmetic tasks. The Roman abacus was developed from devices used in Babylonia as early as BC. Since then, many other forms of reckoning boards or tables have been invented. In a medieval European counting house , a checkered cloth would be placed on a table, and markers moved around on it according to certain rules, as an aid to calculating sums of money.

The Antikythera mechanism is believed to be the earliest known mechanical analog computer , according to Derek J. It was discovered in in the Antikythera wreck off the Greek island of Antikythera , between Kythera and Crete , and has been dated to approximately c.

Devices of comparable complexity to the Antikythera mechanism would not reappear until the fourteenth century. Many mechanical aids to calculation and measurement were constructed for astronomical and navigation use.

A combination of the planisphere and dioptra , the astrolabe was effectively an analog computer capable of working out several different kinds of problems in spherical astronomy. An astrolabe incorporating a mechanical calendar computer [9] [10] and gear -wheels was invented by Abi Bakr of Isfahan , Persia in The sector , a calculating instrument used for solving problems in proportion, trigonometry, multiplication and division, and for various functions, such as squares and cube roots, was developed in the late 16th century and found application in gunnery, surveying and navigation.

The planimeter was a manual instrument to calculate the area of a closed figure by tracing over it with a mechanical linkage. The slide rule was invented around — by the English clergyman William Oughtred , shortly after the publication of the concept of the logarithm. It is a hand-operated analog computer for doing multiplication and division. As slide rule development progressed, added scales provided reciprocals, squares and square roots, cubes and cube roots, as well as transcendental functions such as logarithms and exponentials, circular and hyperbolic trigonometry and other functions.

Slide rules with special scales are still used for quick performance of routine calculations, such as the E6B circular slide rule used for time and distance calculations on light aircraft. In the s, Pierre Jaquet-Droz , a Swiss watchmaker , built a mechanical doll automaton that could write holding a quill pen. By switching the number and order of its internal wheels different letters, and hence different messages, could be produced.

In effect, it could be mechanically “programmed” to read instructions. In —, mathematician and engineer Giovanni Plana devised a Perpetual Calendar machine , which, through a system of pulleys and cylinders and over, could predict the perpetual calendar for every year from AD 0 that is, 1 BC to AD , keeping track of leap years and varying day length. The tide-predicting machine invented by the Scottish scientist Sir William Thomson in was of great utility to navigation in shallow waters.

It used a system of pulleys and wires to automatically calculate predicted tide levels for a set period at a particular location. The differential analyser , a mechanical analog computer designed to solve differential equations by integration , used wheel-and-disc mechanisms to perform the integration. In , Sir William Thomson had already discussed the possible construction of such calculators, but he had been stymied by the limited output torque of the ball-and-disk integrators.

The torque amplifier was the advance that allowed these machines to work. Starting in the s, Vannevar Bush and others developed mechanical differential analyzers. Charles Babbage , an English mechanical engineer and polymath , originated the concept of a programmable computer. Considered the ” father of the computer “, [17] he conceptualized and invented the first mechanical computer in the early 19th century.

After working on his revolutionary difference engine , designed to aid in navigational calculations, in he realized that a much more general design, an Analytical Engine , was possible. The input of programs and data was to be provided to the machine via punched cards , a method being used at the time to direct mechanical looms such as the Jacquard loom. For output, the machine would have a printer, a curve plotter and a bell. The machine would also be able to punch numbers onto cards to be read in later.

The Engine incorporated an arithmetic logic unit , control flow in the form of conditional branching and loops , and integrated memory , making it the first design for a general-purpose computer that could be described in modern terms as Turing-complete.

The machine was about a century ahead of its time. All the parts for his machine had to be made by hand — this was a major problem for a device with thousands of parts. Eventually, the project was dissolved with the decision of the British Government to cease funding. Babbage’s failure to complete the analytical engine can be chiefly attributed to political and financial difficulties as well as his desire to develop an increasingly sophisticated computer and to move ahead faster than anyone else could follow.

Nevertheless, his son, Henry Babbage , completed a simplified version of the analytical engine’s computing unit the mill in He gave a successful demonstration of its use in computing tables in During the first half of the 20th century, many scientific computing needs were met by increasingly sophisticated analog computers , which used a direct mechanical or electrical model of the problem as a basis for computation.

However, these were not programmable and generally lacked the versatility and accuracy of modern digital computers. The differential analyser , a mechanical analog computer designed to solve differential equations by integration using wheel-and-disc mechanisms, was conceptualized in by James Thomson , the elder brother of the more famous Sir William Thomson. The art of mechanical analog computing reached its zenith with the differential analyzer , built by H.

This built on the mechanical integrators of James Thomson and the torque amplifiers invented by H. A dozen of these devices were built before their obsolescence became obvious. By the s, the success of digital electronic computers had spelled the end for most analog computing machines, but analog computers remained in use during the s in some specialized applications such as education slide rule and aircraft control systems.

By , the United States Navy had developed an electromechanical analog computer small enough to use aboard a submarine. This was the Torpedo Data Computer , which used trigonometry to solve the problem of firing a torpedo at a moving target.

During World War II similar devices were developed in other countries as well. Early digital computers were electromechanical ; electric switches drove mechanical relays to perform the calculation.

These devices had a low operating speed and were eventually superseded by much faster all-electric computers, originally using vacuum tubes.

The Z2 , created by German engineer Konrad Zuse in , was one of the earliest examples of an electromechanical relay computer. In , Zuse followed his earlier machine up with the Z3 , the world’s first working electromechanical programmable , fully automatic digital computer.

It was quite similar to modern machines in some respects, pioneering numerous advances such as floating-point numbers. Rather than the harder-to-implement decimal system used in Charles Babbage ‘s earlier design , using a binary system meant that Zuse’s machines were easier to build and potentially more reliable, given the technologies available at that time. Zuse’s next computer, the Z4 , became the world’s first commercial computer; after initial delay due to the Second World War, it was completed in and delivered to the ETH Zurich.

Purely electronic circuit elements soon replaced their mechanical and electromechanical equivalents, at the same time that digital calculation replaced analog. The engineer Tommy Flowers , working at the Post Office Research Station in London in the s, began to explore the possible use of electronics for the telephone exchange. Experimental equipment that he built in went into operation five years later, converting a portion of the telephone exchange network into an electronic data processing system, using thousands of vacuum tubes.

The German encryption machine, Enigma , was first attacked with the help of the electro-mechanical bombes which were often run by women.

Colossus was the world’s first electronic digital programmable computer. It had paper-tape input and was capable of being configured to perform a variety of boolean logical operations on its data, but it was not Turing-complete. Colossus Mark I contained 1, thermionic valves tubes , but Mark II with 2, valves, was both five times faster and simpler to operate than Mark I, greatly speeding the decoding process.

Like the Colossus, a “program” on the ENIAC was defined by the states of its patch cables and switches, a far cry from the stored program electronic machines that came later. Once a program was written, it had to be mechanically set into the machine with manual resetting of plugs and switches. It combined the high speed of electronics with the ability to be programmed for many complex problems.

It could add or subtract times a second, a thousand times faster than any other machine. It also had modules to multiply, divide, and square root. High speed memory was limited to 20 words about 80 bytes. Built under the direction of John Mauchly and J.

The machine was huge, weighing 30 tons, using kilowatts of electric power and contained over 18, vacuum tubes, 1, relays, and hundreds of thousands of resistors, capacitors, and inductors. The principle of the modern computer was proposed by Alan Turing in his seminal paper, [42] On Computable Numbers.



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Click the Browse button to select your default Outlook. If you upgraded to Outlook on a computer that already had data files created in previous versions, you will find the outlook. Try to open Outlook and if it starts without errors, congratulations! You do not need the remainder of this article : Or maybe, it’s worth to bookmark it for the future. When it comes to using compatibility mode in Outlook, let me quote a wisdom that Outlook’s guru Diane Poremsky shared on her blog : “If you enabled compatibility mode, disable it.

If you haven’t, don’t even consider it. Alternatively, you can find outlook. EXE, and then click Properties. Switch to the Compatibility tab and be sure to clear the ” Run this program in compatibility mode for ” check box. Click OK and try to start Outlook.

If you still cannot open the Outlook window and the same “Cannot start Microsoft Office Outlook” error persists, try to restore the previous version of the PST file. Of course, in this case some of your recent emails and appointments will be lost, but it seems to be a better alternative than no Outlook at all. So, right click on the Outlook. If neither repairing nor restoring the Outlook. If it does, then you can copy your current Outlook data file.

For full details, see Microsoft’s step-by-step guidance on creating a new Outlook profile. Set the new profile as the default one. After you do this, a tick will appear to the left of the newly created profile, as you see in the screenshot below. Try to open Outlook and if it starts normally with the newly created profile, copy the data from your old. Import data from the old Outlook PST file. Hopefully, now you can finally open Outlook but your PST file is new and therefore empty.

Don’t panic, this is not a problem at all compared to the one you’ve just solved : Perform the following steps to copy emails, calendar appointments and other items from your old. Select ” Import from another program of file ” and click Next. Choose ” Outlook DataFile. Click the Browse button and select your old. If you’ve had just one Outlook profile and never renamed the PST file, then most likely it will be Outlook. Click Next and then Finish to complete the migration process. If your old Outlook PST file was severely damaged and the repair procedure was not successful, you may get ” Cannot start Microsoft Outlook.

The set of folders cannot be opened ” error again. If this case, the only way is to create a new profile and use it without importing data from the old. If your old. I cannot recommend any particular tool because luckily have never had to use any on my own machine. Starting Outlook in Safe Mode actually means that it will be run without any add-ins that are currently installed on your machine. It is the fastest way to determine if the problem on Outlook start up is caused by some of the add-ins.

Outlook will display a message asking you to confirm that you really want to start it in safe mode, click Yes. An alternative way is to use the outlook. If Outlook starts fine in safe mode, the problem is definitely with one of your add-ins.

Try to disable the add-ins one at a time to detect which one is causing the problem. You can find the detailed information in : How to disable Outlook add-ins. The main symptom is Outlook hanging on the Loading Profile screen, and the main cause is a conflict between the operating system and OEM video drivers. If against all expectations your Outlook still won’t open, try the troubleshooting steps below. These tips cover other, less frequent scenarios, and more specific errors.

As the error description explains, this error happens if you have a corrupted or outdated MAPI DLL installed on your machine. Usually this happens when you’d installed a newer version of Microsoft Office and then installed an older one.

The entire text of the error message is this: ” Cannot start Microsoft Office Outlook. DLL is corrupt or the wrong version. This could have been caused by installing other messaging software. Please reinstall Outlook. If you work in a corporate environment and your company uses an Outlook Exchange server, then the “unable to open Outlook” problem may be caused by something known as Cached Exchange Mode.

When the Cached Exchange Mode is enabled, it saves and regularly updates a copy of your Exchange mailbox on your computer. If you don’t need this option, then turn it off and you should no longer get the error.

Another error that may occur in the Exchange server environment is related to a missing default gateway setup. I’m not really sure what it actually means, but fortunately for us Microsoft has an explanation and automatic fix for Outlook and You can download it from this page.

One more cause of errors when starting Outlook is disabling the Encrypt data between Outlook and Microsoft Exchange setting. If it is the case, you will see the errors like these:.

And again, Microsoft has provided the detailed information on how to cope with this problem, you can find it on this page. If you cannot start Outlook because of an error message similar to this one: ” Cannot start Microsoft Outlook. MAPI was unable to load the information service msncon. Be sure the service is correctly installed and configured “, know that it is the Microsoft Hotmail Connector add-in to blame. In this case, uninstall the Outlook Connector manually as recommended on this forum , and then install it anew.

Here are the download links:. Though this section does not relate directly to Outlook start-up problems, it still may be useful if you actively use Outlook in your daily work. Let me, please, quickly introduce you to 5 time-saving plug-ins that automate the following tasks in Outlook – You can find more details about the tools and download their trials by clicking the links above. Just give them a try, and these plug-ins will streamline your email communication and enhance your Outlook experience in so many ways!

Hopefully, at least one of the solutions described in this article helped to resolve the problem on your machine and now your Outlook is up and running again. If not, you can leave a comment here and we will try to figure out the solution together.

Thanks for reading! Table of contents. Unable to open Outlook window” error”. Thank you! Removing the XML did the trick for me. Go to search in your computer. Thereafter, past “Outlook. One of the reason is that PST file exists on a network server that is unavailable. So, in such a case the only way left behind to fix this error is by repairing the damaged PST file.

But first, you need to take the backup of PST data and then delete it. Thanks for posting this. I did the first two with no success. Once I switched off compatibility I had it working again Hello dear, nice article. I read your 4 to 5 article and all have wonderful and meaningful information but now I can’t open dll file in my system to solve the Microsoft outlook error. How to solve my problem? Can you please tell me?

Great post. Thanks for sharing such wonderful knowledge. Anyways can you suggest me some better options to get Cheap Linux hosting other than redserverhost. Usually the messages are finally sent.

Had problems for days with opening MS office outlook. Tried MS online but just going round in circles with the online help. Found your sight with the exact “error box message”. Tried a few of your tips, and turning off compatibility worked. All failed for me until I found you could admin the accounts and folders through the control panel.

Thank you very much for this article. Thank you so much. I have searched a solution for this problem for almost two full days without any luck. I do not know if this is the way it should be. Microsoft cannot innovate any more and produces software that sucks.

I am royally frustrated. PST file in outlook which you want to use. Dear Mam, It has helped me a great way. I am working professional working in Garment industry and from few days i was unable to start outlook but by your help i have done successfully, thanks you taught me something helpful.

Just for those in my situation: None of what is in this “How to fix” apply Fist off, I am getting this dreaded error Cannot start Microsoft Outlook. Using a Win 10 laptop remotely. The “. I have and can run Outlook , connecting cleanly via the manual settings no longer allowed under Yes, the “. There isn’t a fixing tool that can correct it.

It seems that Microsoft has to screw with anything that works in order to frustrate everyone into using the junk they are trying to force down the throats of the marketplace.

For those who wonder why this being done on a Win 10 machine, that was a no choice situation forced by Microsoft and Lenovo. I should add that I am using Windows 10, and Outlook Also, if it’s relevant after a check, I have discovered that, along with millions of others, I have 3 instances of being Pwnd.

My problems started a few days ago. First, deleted junk kept reappearing, then while trying to reply to mail, I get a message saying ‘cannot send, device not connected to internet’. However, the person who I wrote to apparently got it and replied. Yet, I’ve just been using it today and I am sure I haven’t deleted it. I got stuck in a loop of the first 2 options navpane, scanpst – neither worked. Eventually, I put back what Scanpst was saying was my corrupted. PST file, rebooted, and all worked again properly.

My original problem happened when I tried adding a work email account into Outlook I already have 9 email accounts loaded. My guess is something was corrupted in Windows’ cache, and all the hard options here were unnecessary. Sorry, but we can help you with the activation of our add-ins only. Outlook belongs to Microsoft, so you should contact their technical support. I found my own solution where all else failed. I had to start outlook in safe mode and the ignore the corrupted “Outlook” named profile but go straight to create a new profile called Nick.

I then needed my outlook icon to use that profile outlook. I now need to find out how to remove the corrupt profile! Thanks for the solution to my problem! Accessing the data files through the Control Panel was the magic for me. Try this if using Windows 7 with Microsoft Outlook Procedure 1.

Click on start menu. Type “Outlook Files”. Click on “Outlook Files” folder under search result. Delete “Outlook” in outlook files folder. Now open “Microsoft outlook ” application.

Click “ok”. Type your login password and confirm. Tick “save password”. It shall be OK now. Thanks for the suggestions above. After trying most of the suggestions i finally managed to fix the issue just by creating a new outlook profile. I just copied the old one, gave it a new name and viola, worked fine. Just tried to open micro soft outlook from my lap top icon for my emails this morning as per normal however I am in the same situation with Outlook , following the uninstall of a third party software.

This software includes an Outlook addon which might explain why the uninstall affected Outlook. Anyway, that’s Microsoft. I have tried all the above mentioned options to no avail. I have recreated a new PST file, Outlook now opens great! It is an OST file which has a M size. So, it seems I have lost 6 months of banking business information. This makes me think how right I am of having 4 home computers equipped with Linux Mageia!

Hi You are right. This problem can be solved by this but i have one more tool by which any non technical user can also run this software to resolve this error. Cannot start Microsoft Office Outlook. The set of folders could not be opened. The server is not available. Contact your administrator if this condition persists. I have little to no pc knowledge and this means nothing to me other than I have no email access.

Is any able to give me any advice on what to do. I even had to type long hand the message as I dont even know how to do a screen shot. Many thanks Julie. I am unable to open my old. I try to open Outlook and a message comes out that we “can only open one version of Outlook at a time”.

But I do not have any other version open!! Svetlana- you are a life saver!!! I was trying to back up my contacts and screwed things up. This helped greatly!!! I had tried ScanPST. So, I followed your given reference about 5 best PST repair tool. I selected stellar PST repair tool and got access to some important emails of my Outlook mailbox.

You are awesome after Step 3 it did not change anything and it still throwed an error but when checked 3. Switch to the Compatibility tab “Run this program in compatibility mode for” was checked again as Windows XP. I had the same problem and eventually I resolved it by enabling the isatap adapter from Microsoft through the CLI netsh int isa set state enabled. I have no idea what the link might be between these two but this resolved my headache.

I was unable to open Outlook and was receiving a pop up stating an invalid XLM. I followed the instructions: Recover Navigation Pane configuration file and it fixed the fault. Many thanks. Thanks Svetlana for this excellent write up.

Recently, I encountered “Unable to display the folder Now, my outlook application is working fine! My problem is a little different in that I do not receive a “cannot open default email folder” note. When I click on the mail icon Windows 8 the blue screen comes up with the envelope on it and then immediately returns to the start screen with all of the icons on it not the desk top screen.

An orphaned calendar was my problem. I received the error listed, but it corresponded with me removing an account from Outlook. I followed the steps above with no success. After remembering the removed email account, I added it back in from the control panel and opened Outlook without a hitch. After looking around I found a calendar attached to that email account, removed it then removed the account again.

Now Outlook works fine. How to fix “Cannot start Microsoft Outlook. Unable to open Outlook window” error. Unable to open Outlook window” – these solutions address the most common causes and work in most cases. Solutions for specific Outlook start up errors – these tips cover less frequent scenarios and address more specific errors. Below you will find the troubleshooting steps for 4 most common problems that prevent Outlook from starting correctly, listed in order of frequency and efficiency: Recover Navigation Pane configuration file Repair your Outlook PST file using Inbox Repair tool Create a new Outlook profil and import data from the old PST file Turn off Compatibility Mode Start Outlook in Safe Mode Fix Outlook hanging on Loading Profile Recover the Navigation Pane configuration file In most cases it is the corrupted Navigation Pane settings file that prevents Outlook from starting successfully, so the first thing you need to do is to mend it.

Here’s how you can do this on different operating systems: If you use Vista, Windows 7 or Windows 8, click the Start button. Type the following command in the search field: outlook. Simply click ” Fix this problem ” link on this page.

Do try to recover the Navigation pane settings file first. Consider deleting as the last resort, if nothing else works. Jamie says:. July 20, at am. Brenton says:. February 9, at am. Rosalie says:. April 30, at pm. Thank you, thank you, thank you. It worked! Very grateful. Our practice is to ship our products promptly upon receipt of purchase orders from customers; consequently, backlog is not significant.

As of June 30, , we employed approximately , people on a full-time basis, 63, in the U. Of the total employed people, 38, were in operations, including manufacturing, distribution, product support, and consulting services; 37, in product research and development; 29, in sales and marketing; and 10, in general and administration.

Certain employees are subject to collective bargaining agreements. In June , management approved a restructuring plan that eliminated approximately 7, positions in fiscal year , primarily in our phone hardware business. In the fourth quarter of , management approved restructuring plans that would result in job eliminations, primarily across our smartphone hardware business and global sales.

In addition to the elimination of 1, positions that were announced in May , approximately 2, roles globally will be reduced during the year as an extension of the earlier plan, and these actions are expected to be completed by the end of fiscal year Our Internet address is www.

At our Investor Relations website, www. Our goal is to maintain the Investor Relations website as a portal through which investors can easily find or navigate to pertinent information about us, including:. The information found on our website is not part of this or any other report we file with, or furnish to, the SEC. In addition to these channels, we use social media to communicate to the public. It is possible that the information we post on social media could be deemed to be material to investors.

We encourage investors, the media, and others interested in Microsoft to review the information we post on the social media channels listed on our Investor Relations website. We generate revenue by licensing and supporting an array of software products, by offering a wide range of services, including cloud-based services to consumers and businesses, by designing, manufacturing, and selling devices that integrate with our cloud-based services, and by delivering relevant online advertising to a global audience.

Our most significant expenses are related to compensating employees; designing, manufacturing, marketing, and selling our products and services; datacenter costs in support of our cloud-based services; and income taxes. Much of our focus in fiscal year was toward transforming our organization to support our strategy of building best-in-class platforms and productivity services for a mobile-first, cloud-first world. We achieved product development milestones, implemented organizational changes, and made strategic and tactical moves to support the three central ambitions that support our strategy: reinventing productivity and business processes; building the intelligent cloud platform; and creating more personal computing.

We will finance the transaction primarily through the issuance of new indebtedness. The acquisition is anticipated to accelerate the growth of LinkedIn, as well as Office and Dynamics. Part of this strategy involves focusing our phone devices on a narrower range of customer categories and differentiating through the combination of hardware and software we are uniquely positioned to offer.

As anticipated, our change in phone strategy resulted in a reduction in units sold and associated expenses in fiscal year , and this trend is expected to continue in fiscal year Our industry is dynamic and highly competitive, with frequent changes in both technologies and business models. Each industry shift is an opportunity to conceive new products, new technologies, or new ideas that can further transform the industry and our business. At Microsoft, we push the boundaries of what is possible through a broad range of research and development activities that seek to identify and address the changing demands of customers and users, industry trends, and competitive forces.

The market for software, devices, and cloud-based services is dynamic and highly competitive. Our competitors are developing new software and devices, while also deploying competing cloud-based services for consumers and businesses. We must continue to evolve and adapt over an extended time in pace with this changing environment. The investments we are making in devices and infrastructure will continue to increase our operating costs and may decrease our operating margins.

Our success is highly dependent on our ability to attract and retain qualified employees. We hire a mix of university and industry talent worldwide. Aggregate demand for our software, services, and devices is correlated to global macroeconomic and geopolitical factors, which remain dynamic. Our international operations provide a significant portion of our total revenue and expenses.

Many of these revenue and expenses are denominated in currencies other than the U. As a result, changes in foreign exchange rates may significantly affect revenue and expenses. The strengthening of the U. See a discussion of these factors and other risks under Risk Factors in our fiscal year Form K. Our revenue historically has fluctuated quarterly and has generally been highest in the second quarter of our fiscal year due to corporate calendar year-end spending trends in our major markets and holiday season spending by consumers.

If our customers choose to license cloud-based versions of our products and services rather than licensing transaction-based products and services, the associated revenue will shift from being recognized at the time of the transaction to being recognized over the subscription period or upon consumption, as applicable.

As a result, we have separately disclosed product revenue and service and other revenue on our consolidated income statements. Product revenue includes sales from operating systems; cross-device productivity applications; server applications; business solution applications; desktop and server management tools; software development tools; video games; hardware such as PCs, tablets, gaming and entertainment consoles, phones, other intelligent devices, and related accessories; and training and certification of computer system integrators and developers.

Service and other revenue includes sales from cloud-based solutions that provide customers with software, services, platforms, and content such as Office , Azure, Dynamics CRM Online, and Xbox Live; solution support; and consulting services.

Service and other revenue also includes sales from online advertising. Segment information appearing in Note 21 — Segment Information and Geographic Data of the Notes to Financial Statements is also presented on this basis. As a result, beginning in fiscal year , we report our financial performance based on our new segments, Productivity and Business Processes, Intelligent Cloud, and More Personal Computing, and analyze operating income as the measure of segment profitability.

We have recast certain previously reported amounts to conform to the way we internally manage and monitor segment performance. We expect to report the financial performance of LinkedIn as part of our Productivity and Business Processes segment. Additional information on our reportable segments is contained in Note 21 — Segment Information and Geographic Data of the Notes to Financial Statements. Windows 10 revenue is primarily recognized at the time of billing in the More Personal Computing segment, and the deferral and subsequent recognition of revenue is reflected in Corporate and Other.

More Personal Computing revenue decreased, mainly due to lower revenue from Devices and Windows, offset in part by higher revenue from search advertising and Gaming. Intelligent Cloud revenue increased, primarily due to higher revenue from server products and cloud services and Enterprise Services. Productivity and Business Processes revenue increased slightly, driven by an increase in Office and Dynamics revenue.

Productivity and Business Processes and More Personal Computing gross margin decreased, offset in part by higher gross margin from Intelligent Cloud. More Personal Computing revenue increased, primarily due to higher revenue from Devices, search advertising and Gaming, offset in part by a decline in Windows revenue.

Intelligent Cloud revenue increased, primarily due to higher revenue from server products and cloud services.

Key changes in expenses were:. Productivity and Business Processes revenue increased slightly, primarily due to an increase in Office and Dynamics revenue. Corporate and Other revenue primarily comprises certain revenue deferrals, including those related to Windows 10, Bundled Offerings, and video games. Corporate and Other operating income loss primarily comprises revenue deferrals and corporate-level activity not specifically allocated to a segment, including impairment, integration, and restructuring expenses.

Research and development expenses include payroll, employee benefits, stock-based compensation expense, and other headcount-related expenses associated with product development. Research and development expenses also include third-party development and programming costs, localization costs incurred to translate software for international markets, and the amortization of purchased software code. Sales and marketing expenses include payroll, employee benefits, stock-based compensation expense, and other headcount-related expenses associated with sales and marketing personnel and the costs of advertising, promotions, trade shows, seminars, and other programs.

General and administrative expenses include payroll, employee benefits, stock-based compensation expense, severance expense, and other headcount-related expenses associated with finance, legal, facilities, certain human resources and other administrative personnel, certain taxes, and legal and other administrative fees. Impairment, integration, and restructuring expenses include costs associated with the impairment of goodwill and intangible assets related to our phone business, employee severance expenses and costs associated with the consolidation of facilities and manufacturing operations related to restructuring activities, and systems consolidation and other business integration expenses associated with our acquisition of NDS.

Our annual goodwill impairment test as of May 1, indicated that the carrying value of our previous Phone Hardware reporting unit goodwill exceeded its estimated fair value. All remaining goodwill and intangible assets are included in our Devices reporting unit, within More Personal Computing under our current segment structure.

We use derivative instruments to: manage risks related to foreign currencies, equity prices, interest rates, and credit; enhance investment returns; and facilitate portfolio diversification. Gains and losses from changes in fair values of derivatives that are not designated as hedges are primarily recognized in other income expense , net.

Other than those derivatives entered into for investment purposes, such as commodity contracts, the gains losses are generally economically offset by unrealized gains losses in the underlying available-for-sale securities and gains losses on certain balance sheet amounts from foreign exchange rate changes.

Dividends and interest income increased due to higher portfolio balances and slightly higher yields on fixed-income securities. Interest expense increased due to higher outstanding long-term debt. Net recognized gains on investments decreased primarily due to higher other-than-temporary impairments and lower gains on sales of fixed-income securities, offset in part by higher gains on sales of equity securities. Net losses on derivatives increased due to higher losses on currency and equity contracts and lower gains on interest rate contracts in the current period as compared to the prior period, offset in part by lower losses on commodity contracts.

For fiscal year , other reflects recognized losses from divestitures and certain joint ventures. Dividends and interest income decreased due to lower yields on fixed-income securities, offset in part by higher portfolio balances. Net recognized gains on investments increased primarily due to higher gains on sales of equity securities, offset in part by higher other-than-temporary impairments.

Net losses on derivatives increased due to losses on commodity contracts in fiscal year as compared to gains in fiscal year , offset in part by lower losses on currency and equity contracts. For fiscal year , other reflects recognized losses from certain joint ventures and divestitures. Our effective tax rate was lower than the U. The decrease in our effective tax rate for fiscal year compared to fiscal year was primarily due to changes in the mix of our income before income taxes between the U.

The fiscal year effective tax rate included the tax impact of losses in foreign jurisdictions for which we may not realize a tax benefit, primarily as a result of impairment and restructuring charges. The mix of income before income taxes between the U. We supply our Windows PC operating system to customers through our U.

In fiscal year , our U. Net revenue deferrals related to sales of Windows 10 negatively impacted our fiscal year U. Impairment, integration, and restructuring expense relating to our phone business decreased our fiscal year U. On July 27, , the U. Tax Court issued an opinion in Altera Corp. Commissioner related to the treatment of stock-based compensation expense in an intercompany cost-sharing arrangement.

This decrease relates primarily to tax credits available for carryover and a partial settlement of the IRS audit for tax years to , offset by increases relating to intercompany transfer pricing. While we settled a portion of the IRS audit for tax years to during the third quarter of fiscal year , and settled a portion of the IRS audit for tax years to during the first quarter of fiscal year , we remain under audit for those years. In February , the IRS withdrew its Revenue Agents Report for tax years to and reopened the audit phase of the examination.

As of June 30, , the primary unresolved issue relates to transfer pricing, which could have a significant impact on our consolidated financial statements if not resolved favorably. We believe our allowances for income tax contingencies are adequate. We have not received a proposed assessment for the unresolved issues and do not expect a final resolution of these issues in the next 12 months. Based on the information currently available, we do not anticipate a significant increase or decrease to our tax contingencies for these issues within the next 12 months.

We also continue to be subject to examination by the IRS for tax years to We are subject to income tax in many jurisdictions outside the U. Our operations in certain jurisdictions remain subject to examination for tax years to , some of which are currently under audit by local tax authorities. The resolutions of these audits are not expected to be material to our consolidated financial statements. In fiscal year , this reduction was mostly offset by losses in foreign jurisdictions for which we may not realize a tax benefit, primarily as a result of impairment and restructuring charges.

Changes in the mix of income before income taxes between the U. In fiscal years and , our U. Our short-term investments are primarily intended to facilitate liquidity and for capital preservation. They consist predominantly of highly liquid investment-grade fixed-income securities, diversified among industries and individual issuers. The investments are predominantly U. Our fixed-income investments are exposed to interest rate risk and credit risk.

The credit risk and average maturity of our fixed-income portfolio are managed to achieve economic returns that correlate to certain fixed-income indices. The settlement risk related to these investments is insignificant given that the short-term investments held are primarily highly liquid investment-grade fixed-income securities.

The remaining cash equivalents and short-term investments held by our foreign subsidiaries were invested in foreign securities. We lend certain fixed-income and equity securities to increase investment returns. The loaned securities continue to be carried as investments on our consolidated balance sheets. Collateral received is recorded as an asset with a corresponding liability. Intra-year variances in the amount of securities loaned are mainly due to fluctuations in the demand for the securities.

In general, and where applicable, we use quoted prices in active markets for identical assets or liabilities to determine the fair value of our financial instruments. This pricing methodology applies to our Level 1 investments, such as exchange-traded mutual funds, domestic and international equities, and U.

If quoted prices in active markets for identical assets or liabilities are not available to determine fair value, then we use quoted prices for similar assets and liabilities or inputs other than the quoted prices that are observable either directly or indirectly.

This pricing methodology applies to our Level 2 investments such as corporate notes and bonds, common and preferred stock, foreign government bonds, mortgage- and asset-backed securities, U. Level 3 investments are valued using internally developed models with unobservable inputs.

Assets and liabilities measured at fair value on a recurring basis using unobservable inputs are an immaterial portion of our portfolio. A majority of our investments are priced by pricing vendors and are generally Level 1 or Level 2 investments as these vendors either provide a quoted market price in an active market or use observable inputs for their pricing without applying significant adjustments.

Broker pricing is used mainly when a quoted price is not available, the investment is not priced by our pricing vendors, or when a broker price is more reflective of fair values in the market in which the investment trades. Our broker-priced investments are generally classified as Level 2 investments because the broker prices these investments based on similar assets without applying significant adjustments.

In addition, all of our broker-priced investments have a sufficient level of trading volume to demonstrate that the fair values used are appropriate for these investments. Our fair value processes include controls that are designed to ensure appropriate fair values are recorded.

These controls include model validation, review of key model inputs, analysis of period-over-period fluctuations, and independent recalculation of prices where appropriate. We issued debt to take advantage of favorable pricing and liquidity in the debt markets, reflecting our credit rating and the low interest rate environment.

The proceeds of these issuances were or will be used for general corporate purposes, which may include, among other things, funding for working capital, capital expenditures, repurchases of capital stock, acquisitions, and repayment of existing debt.

Unearned revenue as of June 30, was comprised mainly of unearned revenue from volume licensing programs. Unearned revenue from volume licensing programs represents customer billings for multi-year licensing arrangements paid for either at inception of the agreement or annually at the beginning of each coverage period and accounted for as subscriptions with revenue recognized ratably over the coverage period.

Unearned revenue as of June 30, also included payments for: Windows 10 licenses; post-delivery support and consulting services to be performed in the future; Office subscriptions; Xbox Live subscriptions; Microsoft Dynamics business solutions products; Skype prepaid credits and subscriptions; Bundled Offerings; and other offerings for which we have been paid in advance and earn the revenue when we provide the service or software, or otherwise meet the revenue recognition criteria.

The following table outlines the expected future recognition of unearned revenue as of June 30, While the program has no expiration date, we intend to complete it by December 31, We provide indemnifications of varying scope and size to certain customers against claims of intellectual property infringement made by third parties arising from the use of our products and certain other matters.

Additionally, we have agreed to cover damages resulting from breaches of certain security and privacy commitments in our cloud business. In evaluating estimated losses on these indemnifications, we consider factors such as the degree of probability of an unfavorable outcome and our ability to make a reasonable estimate of the amount of loss.

These obligations did not have a material impact on our consolidated financial statements during the periods presented. The following table summarizes the payments due by fiscal year for our outstanding contractual obligations as of June 30, We expect the acquisition will close in calendar year , and we will finance the transaction primarily through the issuance of new debt.

We will continue to invest in sales, marketing, product support infrastructure, and existing and advanced areas of technology, as well as continue making acquisitions that align with our business strategy. Additions to property and equipment will continue, including new facilities, datacenters, and computer systems for research and development, sales and marketing, support, and administrative staff.

We expect capital expenditures to increase in coming years in support of our productivity and platform strategy. We have operating leases for most U. We have not engaged in any related party transactions or arrangements with unconsolidated entities or other persons that are reasonably likely to materially affect liquidity or the availability of capital resources. We earn a significant amount of our operating income outside the U. As a result, as discussed above under Cash, Cash Equivalents, and Investments, the majority of our cash, cash equivalents, and short-term investments are held by foreign subsidiaries.

We currently do not intend nor foresee a need to repatriate these funds. We expect existing domestic cash, cash equivalents, short-term investments, cash flows from operations, and access to capital markets to continue to be sufficient to fund our domestic operating activities and cash commitments for investing and financing activities, such as regular quarterly dividends, debt maturities, and material capital expenditures, for at least the next 12 months and thereafter for the foreseeable future.

In addition, we expect existing foreign cash, cash equivalents, short-term investments, and cash flows from operations to continue to be sufficient to fund our foreign operating activities and cash commitments for investing activities, such as material capital expenditures, for at least the next 12 months and thereafter for the foreseeable future. Should we require more capital in the U. These alternatives could result in higher effective tax rates, increased interest expense, or dilution of our earnings.

We have borrowed funds domestically and continue to believe we have the ability to do so at reasonable interest rates. Our consolidated financial statements and accompanying notes are prepared in accordance with U. Preparing consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses.

Critical accounting policies for us include revenue recognition, impairment of investment securities, goodwill, research and development costs, contingencies, income taxes, and inventories. Revenue recognition for multiple-element arrangements requires judgment to determine if multiple elements exist, whether elements can be accounted for as separate units of accounting, and if so, the fair value for each of the elements.

Judgment is also required to assess whether future releases of certain software represent new products or upgrades and enhancements to existing products. Certain volume licensing arrangements include a perpetual license for current products combined with rights to receive unspecified future versions of software products and are accounted for as subscriptions, with billings recorded as unearned revenue and recognized as revenue ratably over the coverage period.

Software updates are evaluated on a case-by-case basis to determine whether they meet the definition of an upgrade, which may require revenue to be deferred and recognized when the upgrade is delivered.

If updates are determined to not meet the definition of an upgrade, revenue is generally recognized as products are shipped or made available. Microsoft enters into arrangements that can include various combinations of software, services, and hardware. Where elements are delivered over different periods of time, and when allowed under U. GAAP, revenue is allocated to the respective elements based on their relative selling prices at the inception of the arrangement, and revenue is recognized as each element is delivered.

For software elements, we follow the industry-specific software guidance which only allows for the use of VSOE in establishing fair value. Generally, VSOE is the price charged when the deliverable is sold separately or the price established by management for a product that is not yet sold if it is probable that the price will not change before introduction into the marketplace.

ESPs are established as best estimates of what the selling prices would be if the deliverables were sold regularly on a stand-alone basis. Our process for determining ESPs requires judgment and considers multiple factors that may vary over time depending upon the unique facts and circumstances related to each deliverable. In January , we announced Windows 10 would be free to all qualified existing users of Windows 7 and Windows 8. This offer differs from historical offers preceding the launch of new versions of Windows as it is being made available for free to existing users in addition to new customers after the offer announcement.

We evaluated the nature and accounting treatment of the Windows 10 offer and determined that it represents a marketing and promotional activity, in part because the offer is being made available for free to existing users.

As this is a marketing and promotional activity, revenue recognition of new sales of Windows 8 will continue to be recognized as delivered. Customers purchasing a Windows 10 license will receive unspecified updates and upgrades over the life of their Windows 10 device at no additional cost.

As these updates and upgrades will not be sold on a stand-alone basis, we are unable to establish VSOE. Accordingly, revenue from licenses of Windows 10 is recognized ratably over the estimated life of the related device, which ranges between two to four years. We currently are evaluating the impact of the new standard related to revenue recognition, which we anticipate will have a material impact on our consolidated financial statements.

We review investments quarterly for indicators of other-than-temporary impairment. This determination requires significant judgment.

In making this judgment, we employ a systematic methodology quarterly that considers available quantitative and qualitative evidence in evaluating potential impairment of our investments. If the cost of an investment exceeds its fair value, we evaluate, among other factors, general market conditions, credit quality of debt instrument issuers, the duration and extent to which the fair value is less than cost, and for equity securities, our intent and ability to hold, or plans to sell, the investment.

For fixed-income securities, we also evaluate whether we have plans to sell the security or it is more likely than not that we will be required to sell the security before recovery. We also consider specific adverse conditions related to the financial health of and business outlook for the investee, including industry and sector performance, changes in technology, and operational and financing cash flow factors. Once a decline in fair value is determined to be other-than-temporary, an impairment charge is recorded to other income expense , net and a new cost basis in the investment is established.

We allocate goodwill to reporting units based on the reporting unit expected to benefit from the business combination. We evaluate our reporting units on an annual basis and, if necessary, reassign goodwill using a relative fair value allocation approach.

Goodwill is tested for impairment at the reporting unit level operating segment or one level below an operating segment on an annual basis May 1 for us and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit.

Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. The fair value of each reporting unit is estimated primarily through the use of a discounted cash flow methodology. This analysis requires significant judgments, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for our business, estimation of the useful life over which cash flows will occur, and determination of our weighted average cost of capital.

The estimates used to calculate the fair value of a reporting unit change from year to year based on operating results, market conditions, and other factors. Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment for each reporting unit. Costs incurred internally in researching and developing a computer software product are charged to expense until technological feasibility has been established for the product.

Once technological feasibility is established, all software costs are capitalized until the product is available for general release to customers. Judgment is required in determining when technological feasibility of a product is established. We have determined that technological feasibility for our software products is reached after all high-risk development issues have been resolved through coding and testing.

Generally, this occurs shortly before the products are released to manufacturing. The amortization of these costs is included in cost of revenue over the estimated life of the products. The outcomes of legal proceedings and claims brought against us are subject to significant uncertainty. An estimated loss from a loss contingency such as a legal proceeding or claim is accrued by a charge to income if it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated.

In determining whether a loss should be accrued we evaluate, among other factors, the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss.

Changes in these factors could materially impact our consolidated financial statements. We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. Accounting literature also provides guidance on derecognition of income tax assets and liabilities, classification of deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and income tax disclosures.

Judgment is required in assessing the future tax consequences of events that have been recognized on our consolidated financial statements or tax returns. Variations in the actual outcome of these future tax consequences could materially impact our consolidated financial statements.

Inventories are stated at average cost, subject to the lower of cost or market. Cost includes materials, labor, and manufacturing overhead related to the purchase and production of inventories. We regularly review inventory quantities on hand, future purchase commitments with our suppliers, and the estimated utility of our inventory.

These reviews include analysis of demand forecasts, product life cycle status, product development plans, current sales levels, pricing strategy, and component cost trends. If our review indicates a reduction in utility below carrying value, we reduce our inventory to a new cost basis through a charge to cost of revenue.

Management is responsible for the preparation of the consolidated financial statements and related information that are presented in this report. The Company designs and maintains accounting and internal control systems to provide reasonable assurance at reasonable cost that assets are safeguarded against loss from unauthorized use or disposition, and that the financial records are reliable for preparing consolidated financial statements and maintaining accountability for assets.

These systems are augmented by written policies, an organizational structure providing division of responsibilities, careful selection and training of qualified personnel, and a program of internal audits. The Board of Directors, through its Audit Committee, consisting solely of independent directors of the Company, meets periodically with management, internal auditors, and our independent registered public accounting firm to ensure that each is meeting its responsibilities and to discuss matters concerning internal controls and financial reporting.

Frank H. We are exposed to economic risk from foreign exchange rates, interest rates, credit risk, equity prices, and commodity prices. A portion of these risks is hedged, but they may impact our consolidated financial statements. Certain forecasted transactions, assets, and liabilities are exposed to foreign currency risk. We monitor our foreign currency exposures daily and use hedges where practicable to offset the risks and maximize the economic effectiveness of our foreign currency positions.

Principal currencies hedged include the euro, Japanese yen, British pound, Canadian dollar, and Australian dollar. Our fixed-income portfolio is diversified across credit sectors and maturities, consisting primarily of investment-grade securities. The credit risk and average maturity of the fixed-income portfolio is managed to achieve economic returns that correlate to certain global and domestic fixed-income indices.

Our equity portfolio consists of global, developed, and emerging market securities that are subject to market price risk. We manage the securities relative to certain global and domestic indices and expect their economic risk and return to correlate with these indices.

We use broad-based commodity exposures to enhance portfolio returns and facilitate portfolio diversification. Our investment portfolio has exposure to a variety of commodities, including precious metals, energy, and grain. We manage these exposures relative to global commodity indices and expect their economic risk and return to correlate with these indices. VaR is the expected loss, for a given confidence level, in the fair value of our portfolio due to adverse market movements over a defined time horizon.

The VaR model is not intended to represent actual losses in fair value, including determinations of other-than-temporary losses in fair value in accordance with U. GAAP, but is used as a risk estimation and management tool. The distribution of the potential changes in total market value of all holdings is computed based on the historical volatilities and correlations among foreign exchange rates, interest rates, equity prices, and commodity prices, assuming normal market conditions.

The VaR is calculated as the total loss that will not be exceeded at the Several risk factors are not captured in the model, including liquidity risk, operational risk, and legal risk. The following table sets forth the one-day VaR for substantially all of our positions as of June 30, and and for the year ended June 30, We have recast certain prior period amounts to conform to the current period presentation, with no impact on consolidated net income or cash flows.

The consolidated financial statements include the accounts of Microsoft Corporation and its subsidiaries. Intercompany transactions and balances have been eliminated. Investments through which we are not able to exercise significant influence over the investee and which do not have readily determinable fair values are accounted for under the cost method. As a result, beginning in fiscal year , we report our financial performance based on our new segments described in Note 21 — Segment Information and Geographic Data.

We have recast certain prior period amounts to conform to the way we internally manage and monitor segment performance during fiscal year This change primarily impacted Note 10 — Goodwill, Note 15 — Unearned Revenue, and Note 21 — Segment Information and Geographic Data, with no impact on consolidated net income or cash flows. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses.

Examples of assumptions include: the elements comprising a software arrangement, including the distinction between upgrades or enhancements and new products; when technological feasibility is achieved for our products; the potential outcome of future tax consequences of events that have been recognized on our consolidated financial statements or tax returns; and determining when investment impairments are other-than-temporary.

Assets and liabilities recorded in foreign currencies are translated at the exchange rate on the balance sheet date. Revenue and expenses are translated at average rates of exchange prevailing during the year.

Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collectability is probable. Revenue generally is recognized net of allowances for returns and any taxes collected from customers and subsequently remitted to governmental authorities. For software elements, we follow the industry specific software guidance which only allows for the use of VSOE in establishing fair value.

Technology guarantee programs are accounted for as multiple-element arrangements as customers receive free or significantly discounted rights to use upcoming new versions of a software product if they license existing versions of the product during the eligibility period. Revenue is allocated between the existing product and the new product, and revenue allocated to the new product is deferred until that version is delivered.

The revenue allocation is based on the VSOE of fair value of the products. The VSOE of fair value for upcoming new products are based on the price determined by management having the relevant authority when the element is not yet sold separately, but is expected to be sold in the near future at the price set by management. As these updates and upgrades will not be sold on a stand-alone basis, we are unable to establish VSOE of fair value.

Certain volume licensing arrangements include a perpetual license for current products combined with rights to receive unspecified future versions of software products, which we have determined are additional software products and are therefore accounted for as subscriptions, with billings recorded as unearned revenue and recognized as revenue ratably over the coverage period.

Arrangements that include term-based licenses for current products with the right to use unspecified future versions of the software during the coverage period, are also accounted for as subscriptions, with revenue recognized ratably over the coverage period. Revenue from cloud-based services arrangements that allow for the use of a hosted software product or service over a contractually determined period of time without taking possession of software are accounted for as subscriptions with billings recorded as unearned revenue and recognized as revenue ratably over the coverage period beginning on the date the service is made available to customers.

Revenue from cloud-based services arrangements that are provided on a consumption basis for example, the amount of storage used in a particular period is recognized commensurate with the customer utilization of such resources. Some volume licensing arrangements include time-based subscriptions for cloud-based services and software offerings that are accounted for as subscriptions. These arrangements are considered multiple-element arrangements. However, because all elements are accounted for as subscriptions and have the same coverage period and delivery pattern, they have the same revenue recognition timing.

Revenue related to licensing for games published by third parties for use on the Xbox consoles is recognized when games are manufactured by the game publishers. Display advertising revenue is recognized as advertisements are displayed.

Search advertising revenue is recognized when the ad appears in the search results or when the action necessary to earn the revenue has been completed. Consulting services revenue is recognized as services are rendered, generally based on the negotiated hourly rate in the consulting arrangement and the number of hours worked during the period. Consulting revenue for fixed-price services arrangements is recognized as services are provided. Cost of revenue includes: manufacturing and distribution costs for products sold and programs licensed; operating costs related to product support service centers and product distribution centers; costs incurred to include software on PCs sold by OEMs, to drive traffic to our websites, and to acquire online advertising space; costs incurred to support and maintain Internet-based products and services, including datacenter costs and royalties; warranty costs; inventory valuation adjustments; costs associated with the delivery of consulting services; and the amortization of capitalized software development costs.

Capitalized software development costs are amortized over the estimated lives of the products. We provide for the estimated costs of fulfilling our obligations under hardware and software warranties at the time the related revenue is recognized. For hardware warranties, we estimate the costs based on historical and projected product failure rates, historical and projected repair costs, and knowledge of specific product failures if any.

The specific hardware warranty terms and conditions vary depending upon the product sold and the country in which we do business, but generally include parts and labor over a period generally ranging from 90 days to three years. For software warranties, we estimate the costs to provide bug fixes, such as security patches, over the estimated life of the software.

We regularly reevaluate our estimates to assess the adequacy of the recorded warranty liabilities and adjust the amounts as necessary.

Research and development expenses also include third-party development and programming costs, localization costs incurred to translate software for international markets, and the amortization of purchased software code and services content.

Such costs related to software development are included in research and development expense until the point that technological feasibility is reached, which for our software products, is generally shortly before the products are released to manufacturing. Once technological feasibility is reached, such costs are capitalized and amortized to cost of revenue over the estimated lives of the products.

Sales and marketing expenses include payroll, employee benefits, stock-based compensation expense, and other headcount-related expenses associated with sales and marketing personnel, and the costs of advertising, promotions, trade shows, seminars, and other programs. Advertising costs are expensed as incurred. Compensation cost for stock awards is measured at the fair value on the grant date and recognized as expense, net of estimated forfeitures, over the related service period using the straight-line method.

The fair value of stock awards is based on the quoted price of our common stock on the grant date less the present value of expected dividends not received during the vesting period. Income tax expense includes U. Certain income and expenses are not reported in tax returns and financial statements in the same year.

The tax effect of such temporary differences is reported as deferred income taxes. Deferred tax assets are reported net of a valuation allowance when it is more likely than not that a tax benefit will not be realized.

All deferred income taxes are classified as long-term on our consolidated balance sheets. We account for certain assets and liabilities at fair value. The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market.

We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety.

These levels are:. We measure certain assets, including our cost and equity method investments, at fair value on a nonrecurring basis when they are deemed to be other-than-temporarily impaired.

The fair values of these investments are determined based on valuation techniques using the best information available, and may include quoted market prices, market comparables, and discounted cash flow projections.

An impairment charge is recorded when the cost of the investment exceeds its fair value and this condition is determined to be other-than-temporary. Our other current financial assets and our current financial liabilities have fair values that approximate their carrying values.

We consider all highly liquid interest-earning investments with a maturity of three months or less at the date of purchase to be cash equivalents.

The fair values of these investments approximate their carrying values. In general, investments with original maturities of greater than three months and remaining maturities of less than one year are classified as short-term investments. Investments with maturities beyond one year may be classified as short-term based on their highly liquid nature and because such marketable securities represent the investment of cash that is available for current operations.

All cash equivalents and short-term investments are classified as available-for-sale and realized gains and losses are recorded using the specific identification method. Changes in market value, excluding other-than-temporary impairments, are reflected in OCI.

Equity and other investments classified as long-term include both debt and equity instruments. Debt and publicly-traded equity securities are classified as available-for-sale and realized gains and losses are recorded using the specific identification method. Changes in the market value of available-for-sale securities, excluding other-than-temporary impairments, are reflected in OCI.

Common and preferred stock and other investments that are restricted for more than one year or are not publicly traded are recorded at cost or using the equity method. These transactions are accounted for as secured borrowings and the loaned securities continue to be carried as investments on our consolidated balance sheets.

Cash received is recorded as an asset with a corresponding liability. Investments are considered to be impaired when a decline in fair value is judged to be other-than-temporary.

Fair value is calculated based on publicly available market information or other estimates determined by management. We employ a systematic methodology on a quarterly basis that considers available quantitative and qualitative evidence in evaluating potential impairment of our investments. Derivative instruments are recognized as either assets or liabilities and are measured at fair value.

The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the resulting designation. For derivative instruments designated as fair value hedges, the gains losses are recognized in earnings in the periods of change together with the offsetting losses gains on the hedged items attributed to the risk being hedged.

For options designated as fair value hedges, changes in the time value are excluded from the assessment of hedge effectiveness and are recognized in earnings. For derivative instruments designated as cash flow hedges, the effective portion of the gains losses on the derivatives is initially reported as a component of OCI and is subsequently recognized in earnings when the hedged exposure is recognized in earnings.

For options designated as cash flow hedges, changes in the time value are excluded from the assessment of hedge effectiveness and are recognized in earnings. Gains losses on derivatives representing either hedge components excluded from the assessment of effectiveness or hedge ineffectiveness are recognized in earnings. For derivative instruments that are not designated as hedges, gains losses from changes in fair values are primarily recognized in other income expense , net.

The allowance for doubtful accounts reflects our best estimate of probable losses inherent in the accounts receivable balance. We determine the allowance based on known troubled accounts, historical experience, and other currently available evidence.

Activity in the allowance for doubtful accounts was as follows:. Property and equipment is stated at cost less accumulated depreciation, and depreciated using the straight-line method over the shorter of the estimated useful life of the asset or the lease term. The estimated useful lives of our property and equipment are generally as follows: computer software developed or acquired for internal use, three to seven years; computer equipment, two to three years; buildings and improvements, five to 15 years; leasehold improvements, three to 20 years; and furniture and equipment, one to 10 years.

Land is not depreciated. All of our intangible assets are subject to amortization and are amortized using the straight-line method over their estimated period of benefit, ranging from one to 15 years. We evaluate the recoverability of intangible assets periodically by taking into account events or circumstances that may warrant revised estimates of useful lives or that indicate the asset may be impaired. The new guidance requires excess tax benefits and tax deficiencies to be recorded in the income statement when stock awards vest or are settled.

In addition, cash flows related to excess tax benefits will no longer be separately classified as a financing activity apart from other income tax cash flows.

The new standard is effective for us beginning July 1, , with early adoption permitted. We elected to early adopt the new guidance in the third quarter of fiscal year which requires us to reflect any adjustments as of July 1, , the beginning of the annual period that includes the interim period of adoption.

The primary impact of adoption was the recognition of excess tax benefits in our provision for income taxes rather than paid-in capital for all periods in fiscal year Additional amendments to the accounting for income taxes and minimum statutory withholding tax requirements had no impact to retained earnings as of July 1, , where the cumulative effect of these changes are required to be recorded. We have elected to continue to estimate forfeitures expected to occur to determine the amount of compensation cost to be recognized in each period.


– Microsoft office professional plus encountered an error during setup > Ngolongtech

Refer to “The Windows Installer service could not be accessed” error message when you try to install Office.

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