LinkedIn’s Financial Accounting Before and After Microsoft Acquired It : Instructional Case

This case examines the accounting for Microsoft's $27 billion acquisition of LinkedIn in 2016. At that date, LinkedIn's shareholder equity was about $5 billion. The case illustrates how, under GAAP, recorded assets are substantially revalued at the date of acquisition. It also illustrates two different ways acquisitions affect the trend of earnings of the acquirer. First, Microsoft reported LinkedIn revenues and expenses starting on the acquisition date. Second, Microsoft reported much larger expenses for LinkedIn intangible asset amortization following the acquisition than LinkedIn had done as an independent company