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In March 2013 the European Union fined Microsoft $731 Million for failure to provide Windows PC...

In March 2013 the European Union fined Microsoft $731 Million for failure to provide Windows PC users a web browser choice screen

How should Microsoft account for the potential fine of up to 10% of its worldwide revenue and why?

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Answer #1

In March 2013, Mircrosoft was fined $731 million for failure to provide an explorer option to over 15 million users. Only the default option of Microsoft's own explorer was provided. While this was 11% of the company's profit, the fine could have been upto 10% of its worldwide revenue.

The fine might still be charged by the European union as per the impending lawsuit. Thus, Microsoft should record it is a contingent liability as the amount can be reasonably estimated.

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