MSFT · 10-Q · 2026Q1 · Full report

Impairment of Investment Securities

MICROSOFT CORP · 2026-04-29 · Importance 13 · Surprise 6

Microsoft reviews debt investments quarterly for credit losses and impairment, evaluating market conditions, issuers' credit quality, and the extent fair value is below cost. If the company plans to sell a security or is more likely than not required to sell before recovery, declines below cost are recorded as impairment in other income (expense), net, establishing a new cost basis. Equity investments without readily determinable fair values are assessed qualitatively and written down to fair value when impairment indicators exist. Adverse market, industry, or investee conditions may lead to future impairment charges that flow through other income (expense), net.

Key facts

• If we have plans to sell the security or it is more likely than not that we will be required to sell the security before recovery, then a decline in fair value below cost is recorded as an impairment charge in other income (expense), net and a new cost basis in the investment is established. source
• Equity investments without readily determinable fair values are written down to fair value if a qualitative assessment indicates that the investment is impaired and the fair value of the investment is less than carrying value. source
• We review debt investments quarterly for credit losses and impairment. source
• If the cost of an investment exceeds its fair value, we evaluate, among other factors, general market conditions, credit quality of debt instrument issuers, and the extent to which the fair value is less than cost. source
• We perform a qualitative assessment on a periodic basis to determine impairment of equity investments without readily determinable fair values. source