Microsoft 2009 Annual Report Download - page 59

PAGE 59
During fiscal years 2009, 2008, and 2007, depreciation expense was $1.7 billion, $1.4 billion, and $1.2 billion,
respectively. The majority of depreciation expense in all years related to computer equipment.
NOTE 9 ACQUISITIONS
We acquired nine entities during fiscal year 2009 for total consideration of $925 million, substantially all of which was
paid in cash. All of the entities have been consolidated into our results of operations since their respective
acquisition dates. The purchase price allocations for these acquisitions are preliminary for up to 12 months after the
acquisition dates and are subject to revision as more detailed analyses are completed and additional information
about the fair values of assets and liabilities becomes available. Any change in the estimated fair value of the net
assets of the acquired companies within this timeframe will change the amount of the purchase price allocable to
goodwill. Pro forma results of operations have not been presented because the effects of these acquisitions,
individually and in the aggregate, were not material to our consolidated results of operations.
NOTE 10 GOODWILL
Changes in the carrying amount of goodwill for fiscal years 2009 and 2008 by segment were as follows:
(In millions)
Balance as
of June 30,
2007
Acquisitions
Purchase
Accounting
Adjustments
and Other
Balance as
of June 30,
2008 Acquisitions
Purchase
Accounting
A
djustments
and Other
Balance as
of June 30,
2009
Client $ 77
$ 77 $ (1) $ 153 $ 1 $ (77) $ 77
Server and Tools 580
90 68 738 233 67 1,038
Online Services
Business 552
5,775 (53) 6,274 447 (64) 6,657
Microsoft Business
Division 3,132
1,073 (14) 4,191 _ (264) 3,927
Entertainment and
Devices Division 419
354 (21) 752 58 (6) 804
Total $4,760
$7,369 $(21) $12,108 $739 $(344) $12,503
None of the amounts recorded as goodwill are expected to be deductible for tax purposes. The purchase price
allocations for all of the acquisitions are preliminary for up to 12 months after the acquisition date and are subject to
revision as more detailed analyses are completed and additional information about fair value of the assets and
liabilities become available. Any change in the fair value of the net assets of the acquired company within this
timeframe will change the amount of the purchase price allocable to goodwill. Changes in goodwill amounts resulting
from foreign currency translations are included in “purchase accounting adjustments and other” in the above table.
We test goodwill for impairment annually at the reporting unit level using a fair value approach, in accordance with
the provisions of SFAS No. 142, Goodwill and Other Intangible Assets. During the second quarter of fiscal year
2009, we changed the date of our annual impairment test from July 1 to May 1. The change was made to more
closely align the impairment testing date with our long-range planning and forecasting process. We believe the
change in our annual impairment testing date did not delay, accelerate, or avoid an impairment charge. We have
determined that this change in accounting principle is preferable under the circumstances and does not result in
adjustments to our financial statements when applied retrospectively. During fiscal year 2009, the annual impairment
test was performed as of July 1, 2008 and was performed again as of May 1, 2009.