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Forums - Microsoft - OUCH! MS has to write off >$6bn in Q4 to post a Q4 loss

D-Joe on 03 July 2012
M.U.G.E.N said:
If I'm not mistaken the 6bil figure shows the initial investment + any expenses that can be converted as part of the asset over the years as well.

what's that mean



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M.U.G.E.N on 03 July 2012
D-Joe said:
M.U.G.E.N said:
If I'm not mistaken the 6bil figure shows the initial investment + any expenses that can be converted as part of the asset over the years as well.

what's that mean


Some expenses related to assets/investments can be added to the overall value of the asset depending on the nature of the expense. For example implimentation expenses of a machine will be part of the value of the machine itself in the financial records. To explain furthure, let's say you buy a machine for 100k and you have to spend 20k more to get the machine running in your business. You might be able to say your asset is valued at 120k now since that 20k was unavoidable and was part of the transaction. Also any new additions to the asset that increases the value of it can be added to the overall asset value as well. 

So it's most probably not just initial investment that is 6billion



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D-Joe on 03 July 2012

ok
well it doesn't really matter,because it will still show MS will loss 1bn(even not a really loss) and online service division is a shitty division in MS



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Carl on 04 July 2012
kowenicki said:
Carl2291 said:
Why would it upset anyone that they will be making Billions more?

6 Billion is gigantic. Doesnt matter if it was Years ago or Yesterday. Does it?


No I meant... if the headline is MS loses 1bn this quarter then I expect a lot of uneducated fanboy bullshit laying claim to MS doom...

There is a world of differenc between this and the recent Sony write down.... a world of difference.



Yeah, thats bound to happen. Doesnt matter if its a Billion or a Million. Same would go for Sony and Nintendo.



                            

LivingMetal on 04 July 2012
Millenium said:
Suprised this took so long to post. :P

Anyways, I don't really understand this concept of writing off their value?

Guess we'll see a ~1B loss for the quarter then, not favourable, but not too bad all things considering.


Then maybe you should have posted this sooner.  Just saying.



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Millenium on 05 July 2012

no. just saying.



Kasz216 on 10 July 2012
M.U.G.E.N said:
Millenium said:
M.U.G.E.N said:
Millenium said:
Suprised this took so long to post. :P

Anyways, I don't really understand this concept of writing off their value?

Guess we'll see a ~1B loss for the quarter then, not favourable, but not too bad all things considering.


Companies write off values based on the current value of assets (even liabilities etc) over time. Such a thing happens when a drastic change occurs to the overall value of an asset that lost it's value and can not be reasonably expected to change back to the estimated value in the foreseeable future. In such cases it's 'required' that they do a write off in US GAAP

Basically MS knows now this investment has gone to shit. It sucks but that's the nature of investments. You win some you lose some.

just woke up so if I just typed a bunch of gibberish hard to understand, I apologize :P



Cheers for explaining that (Accounting never was my strong point :p), makes sense now, I didn't even think of the fact that it was considered as a asset before you reminded :)

2. The way this could be a tax benefit is that, atleast a really significant one (keep in mind this is one of the biggest companies in the world, so their tax amounts should be pretty impressive as well) would be if this 6 billion amount of moves them down to a lower tax bracket (as in the more you earn the more % they tax you, so for example someone who earns 100k will get taxed 15% but someone who earns 99k only get taxed for 10%)

You have never paid taxes in your life have you?  That is not how taxes work in the slightest.

Taxes work on a graduated system.

If someone who earns 99 K will get taxed at 10%

Someone who makes 100K  will get taxed 10% on their 99K,  and 15% on there exrta 1K.

In otherwords, the person who makes 100K will still have more money post taxes.

"Dodging tax brackets" is a myth made by people who know nothing about taxes.

This 6 billon dollar "loss" means that they won't have to pay taxes on 6 billion dollars worth of profits this year.  Considering this was money spent two-three years ago.  It's really not a bad deal.

 

Also... coproations have a flat tax.  There are no "Corporation tax brackets" even if that was how tax brackets did work! (it isn't.)   It's all 35 percent of taxable income greater then $335,000 unless your a special "small buisness" corporation that puts you on the Individual tax bracket.


So in otherwords, Microsoft will save around,   $2,100,000,000 in taxes due to this writeoff.



M.U.G.E.N on 10 July 2012
Kasz216 said:
M.U.G.E.N said:

2. The way this could be a tax benefit is that, atleast a really significant one (keep in mind this is one of the biggest companies in the world, so their tax amounts should be pretty impressive as well) would be if this 6 billion amount of moves them down to a lower tax bracket (as in the more you earn the more % they tax you, so for example someone who earns 100k will get taxed 15% but someone who earns 99k only get taxed for 10%)

You have never paid taxes in your life have you?  That is not how taxes work in the slightest.

Taxes work on a graduated system.

If someone who earns 99 K will get taxed at 10%

Someone who makes 100K  will get taxed 10% on their 99K,  and 15% on there exrta 1K.

In otherwords, the person who makes 100K will still have more money post taxes.

"Dodging tax brackets" is a myth made by people who know nothing about taxes.

This 6 billon dollar "loss" means that they won't have to pay taxes on 6 billion dollars worth of profits this year.  Considering this was money spent two-three years ago.  It's really not a bad deal.

 

Also... coproations have a flat tax.  There are no "Corporation tax brackets" even if that was how tax brackets did work! (it isn't.)   It's all 35 percent of taxable income greater then $335,000 unless your a special "small buisness" corporation that puts you on the Individual tax bracket.


So in otherwords, Microsoft will save around,   $2,100,000,000 in taxes due to this writeoff.

blah nvm this is not gonna end if I do this



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Kasz216 on 11 July 2012
M.U.G.E.N said:
Kasz216 said:
M.U.G.E.N said:

2. The way this could be a tax benefit is that, atleast a really significant one (keep in mind this is one of the biggest companies in the world, so their tax amounts should be pretty impressive as well) would be if this 6 billion amount of moves them down to a lower tax bracket (as in the more you earn the more % they tax you, so for example someone who earns 100k will get taxed 15% but someone who earns 99k only get taxed for 10%)

You have never paid taxes in your life have you?  That is not how taxes work in the slightest.

Taxes work on a graduated system.

If someone who earns 99 K will get taxed at 10%

Someone who makes 100K  will get taxed 10% on their 99K,  and 15% on there exrta 1K.

In otherwords, the person who makes 100K will still have more money post taxes.

"Dodging tax brackets" is a myth made by people who know nothing about taxes.

This 6 billon dollar "loss" means that they won't have to pay taxes on 6 billion dollars worth of profits this year.  Considering this was money spent two-three years ago.  It's really not a bad deal.

 

Also... coproations have a flat tax.  There are no "Corporation tax brackets" even if that was how tax brackets did work! (it isn't.)   It's all 35 percent of taxable income greater then $335,000 unless your a special "small buisness" corporation that puts you on the Individual tax bracket.


So in otherwords, Microsoft will save around,   $2,100,000,000 in taxes due to this writeoff.

blah nvm this is not gonna end if I do this

If you say so... just learn how taxes work.

It's worth noting they will save about that much in taxes, even if they post a loss, becuase losses in taxes are alowed to be moved foward.



M.U.G.E.N on 11 July 2012
Kasz216 said:
M.U.G.E.N said:

blah nvm this is not gonna end if I do this

If you say so... just learn how taxes work.

It's worth noting they will save about that much in taxes, even if they post a loss, becuase losses in taxes are alowed to be moved foward.


Nope I did write a long ass reply..posted it..them removed it because I know you and we have done this song and dance before...it's gonna drag on and on..last time this happened you ended up arguing on my wall also

I am an accounting major...and the stuff you just said are overly simplified at best. This is not a black and white situation. The requirements/conditions/criteria vary a lot going by federal, state and also are affected by various points put forth by US GAAP and will affect the amount they can use as an itemized deduction. There is no such thing as a flat tax rate at a federal level and even at a state level less than 10 states use it. I think you are misusing the term here out of ignorance. Loss/Gain/Tax Credit carry forward and backward, I know these things, and I know them much better than you and don't even kid yourself thinking otherwise. I definitely know how progressive taxation works (yes that's the actual term). Next time, if there's reason to believe the guy knows what he is talking about and you find a statement he made to be wrong or odd, give the benefit of the doubt to him and ask him to clarify without being condescending. You did HR or something right? Apply things you learned in it if so. Anywho I won't bother with this topic any furthure, heck I shouldn't have had to even post this. anyways think what you must



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