Microsoft 2009 Annual Report Download - page 58

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PAGE 58
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON A NONRECURRING BASIS
We measure certain assets, including our cost and equity method investments, at fair value on a nonrecurring basis.
These assets are recognized at fair value when they are deemed to be other-than-temporarily impaired. At June 30,
2009, the fair value of the common and preferred stock that we held that was required to be measured at fair value
on a non-recurring basis was $164 million. This fair value was determined using models with significant
unobservable inputs.
In accordance with the provisions of Accounting Principles Board Opinion No. 18, The Equity Method of
Accounting for Investments in Common Stock, we review the carrying values of our investments when events and
circumstances warrant, and we consider all available evidence in evaluating when declines in fair value are other
than temporary. The fair values of our 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. During the fiscal year ended June 30, 2009, impairment charges
of $86 million were recognized for certain investments measured at fair value on a nonrecurring basis as the decline
in their respective fair values below their cost was determined to be other than temporary in all instances.
NOTE 7 INVENTORIES
The components of inventories were as follows:
(In millions)
June 30, 2009 2008
Raw materials $170 $417
Work in process 45 31
Finished goods 502 537
Total $717 $985
NOTE 8 PROPERTY AND EQUIPMENT
The components of property and equipment were as follows:
(In millions)
June 30, 2009 2008
Land $ 526 $ 518
Buildings and improvements 5,886 4,302
Leasehold improvements 1,938 1,728
Computer equipment and software 4,989 4,475
Furniture and equipment 1,743 1,521
Total, at cost 15,082 12,544
Accumulated depreciation (7,547) (6,302)
Total, net $ 7,535 $ 6,242
Property and equipment are stated at cost. Depreciation is computed principally on the straight-line method over the
estimated useful lives of the assets. The useful lives for buildings range from five to 15 years, leasehold
improvements generally range from two to 10 years (representing the applicable lease terms plus reasonably
assured extensions), computer equipment and software range from two to three years, and furniture and equipment
range from one to five years. Land is not depreciated.