In this individual project I will analysis the financial statements of the social media network Facebook and the software publisher Microsoft in the Internet industry. The project goal is to evaluate risks, performance, financial health, and future prospects of the two firms. I will specifically analyse the complex and ambiguous revenue recognition and the impact of M&A on the companies’ financial statements. In the following I will assess and compare the companies’ strategy, key accounting items, profitability, liquidity, and risk.