In 2012 Microsoft Corporation reported a $6.2 billion goodwill impairment loss. Referring to Microsoft’s 2012 financial statements, address the following:
1. Microsoft’s segments serve as its reporting units for assessing goodwill for potential impairments. Which segment suffered a 2012 impairment? Describe the revenue model for this segment.
2. How did Microsoft reflect its 2012 goodwill impairment in financial statements?
3. What were the underlying business reasons that required Microsoft to record a goodwill impairment in 2012?
4. Describe the goodwill impairment testing steps performed by Microsoft in 2012.