Some of the external influences on the financial reporting of company include legal, taxation, Culture, corporate finance and the accounting profession. These factors are explained below in detail:
The results through legal proceedings emulated by other legal claims brought against Microsoft are liable to a critical vulnerability. An expected loss through a loss contingency, for example, a lawful proceedings or case is found to be accrued through to pay on the off chance that it is likely that an asset has been debilitated or some sort of liability has been caused and the measure of the loss can be sensibly evaluated(Bracci, 2013). In figuring out if a loss ought to be accrued, one can assess, among different elements, the level of likelihood of an unfavorable result and the capacity to make a sensible evaluation of the determination of loss. variations in these factors could tangibly affect the combined financial statements of Microsoft.
Microsoft’s effective rate of tax for financial years 2013 and 2014 was estimated to be nearly 19% and 21%, separately(Marc, 2006). This effective rate of tax was lower than the U.S. government statutory rate basically because of income that was taxes at lower rates in outside purview coming about because of delivering and distribution of their services and products through their remote regional operational centers in Ireland, Puerto Rico and Singapore.
Their financial year 2014 effect rate got increased by 2 percent from monetary year 2013 principally because of adjustments and other arrangements of about $458 million to earlier years’ liabilities for transfer pricing through inter company that resulted in an increase of the taxable income in all the more profoundly tax related purview, and additionally losses brought about by NDS and changes in the geographic blend of their business(Anon., 2013). This was counterbalanced to some extent by great advancements of transfer pricing in certain outside duty purview, principally Denmark.