15 Jun 2022


Milestone One: Stockholder's Equity and Revenue Recognition

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Academic level: Master’s

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Words: 458

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Google Company deals with internet related services and founded in late 90’s, got its first funding in the form of a US$100,000 from Andy Bechtolsheim, the co-founder of Sun Microsystems before the company was incorporated. A year later, the company got $25 million from major investors including the venture capital firms and Sequoia Capital and took five more years to get public offerings. In October 2003, while discussing a possible initial public offering of shares (IPO), Microsoft approached with the intention to collaborate with the company, but the deal did not materialize. A year later, Google announced the hiring of Morgan Stanley and Goldman Sachs Group to arrange an IPO. The IPO managed to raise up to $4 billion. 

Google Company had 100,000 shares in convertible preferred stock and sold them at $0.001 par value per share, and had no shares issued and outstanding. The company had class A, class B common stock, and Class C capital stock. Regarding additional paid-in capital, the company had 15,000,000 shares and sold each at $0.0001 par value. The shares included 9,000,000 shares in common stock class A, 3,000,000 shares in class B and 3,000,000 shares for Class C. It also had 680,172 shares (Class A 286,560, Class B 53,213, Class C 340,399) and par value. Moreover, it sold $680 shares (Class A $287, Class B $53, Class C $340) and 687,693 shares (Class A 291,214, Class B 50,990, Class C 345,489) and par value of $688 (Class A $291, Class B $51, Class C $346) shares issued and outstanding. The company had retained earnings of 85,969 and the total stockholders’ equity of $ 144,281. 

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Android currently holds around 84.7 percent of the market, compared to Apple’s 11.7 percent while Windows Phone 8, BlackBerry, and other operators make up around 3.6 percent. Therefore, Apple Company may not seem like a huge threat to Google. Amazon is the biggest threat to Google since it has grown 73 percent over the last year, while shopping searches on Google have been flat. 

Regarding company’s dividend policy and its history, Google Company has never paid any cash dividend that includes the common and preferred dividend. 

In Google Company, IAS 18 Revenue standard helps in accounting for the revenue collected from the selling internet related services, cloud computing, software development, and dividends. In addition, the tax is measured at the fair value of the consideration received or receivable and recognized when prescribed conditions are met; that depend on the nature of the income. 

The company’s revenue increased from $47,898 million to $53,660 million in the last two years. This can be attributed to high revenues from Google services and Google Network Members' websites due to more advertisements. 

In all instances, the lost or stolen Google products are removed from the balance sheet as no future economic benefits from the asset that can be realized or controlled by the entity. Any insurance claim receipts are accounted for separately, instead of adjusting the carrying amount of the benefits. If the amount of loss is material, such as mobile phones, it may be important to present the loss separately in the income statement. 

In conclusion, Google Company has been improving every day due to enhancing their products and services and the change in economic landscape has allowed the company to acquire new and exciting ways to generate revenue. 

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StudyBounty. (2023, September 15). Milestone One: Stockholder's Equity and Revenue Recognition.


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