Linking the statements - non cash add back situation
IB
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(Senior Monkey, 83
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on 3/18/11 at 1:06pm
I'm looking at the 10k for Microsoft and there are 2 non-cash expenses being added back to net income on the cash flow.
Recognition of Unearned Revenue and Deferral of Unearned Revenue.
How should I treat these items if I am linking the statements.
If I put them into deferred revenue won't that will in effect double count those items as I account for deferred revenue when calculating changes in operating assets and liabilities.
I read through the 10k and there is zero reference to these items.
Thanks guys





Deferred and unearned revenue
Deferred and unearned revenue should be cash coming in but not showing up as revenue on your income statement.
As a result, this be will a cash inflow on your CF statement as CF from operations.
This increases your cash on the balance sheet and it balances by increasing your liabilities by the same amount in the deferred & unearned revenue line item under current liabilities.
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they have it broken out by
they have it broken out by long term and short term. on your CF statement under adjustment for working capital, do not include the short term portion and the cash inflow on the balance sheet should be total revenues deferred minus total deferred recognized
solid - thanks for the help
solid - thanks for the help guys
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