Full Disclosure Paper: Starbucks
Full Disclosure Paper: Starbucks This paper will discuss the disclosures contained in Starbucks’ financial Statements that are related to cash and cash equivalents, receivables, and inventories. This paper will identify the components of their cash and cash equivalents. The original name of the company was Starbucks Coffee, Tea and Spices which later on was changed to Starbucks Coffee Company. Starbuck was staring in 1971; they were located at Seattle’s Pike Place Market. Starbucks is named after the first mate in Herman Melville’s Moby Dick. (Starbucks.com)
The full disclosure principle in accounting states that future events which could occur or may occur within a company, and will have a material economic impact on the …show more content…
They have stored value cards that are Starbucks Card, gift certificates. These cards and gift certificates do not have any expiration and not service fee on customer balances. These balances are added to “Deferred revenue” on the balance sheet of starbucks consolidated financial statements. Starbucks uses retail revenue at the point of sale for their retail stores. They also have a sales return allowance to help reduce retail returns on their products at a future date. The revenue from retail stores are reported net of sales. In the notes another area that is discussed is specialty revenues. These revenues are basically sales to customers that are not through company-operated retail stores. These include sales of coffee, tea and other related products are recognized upon shipment to the customer. The shipping charges are recognized as revenue too. Starbucks individually looks at other arrangements that involve multiple elements and deliverables that might have upfront fees for revenue recognition. When the company receives cash in advance for services or products this is recorded in “deferred revenues”. (Starbucks, …show more content…
Since September, 2007 the company is dedicated to purchasing green coffee cost $324 million at a fixed-price contract. According to the notes Starbucks inventory is lower of cost (primarily moving average cost). Inventory reserves are based on the trends and historical experience. Starbucks records inventory reserves as outdated or slow moving items and for estimated shrinkage between physical inventory counts.
Conclusion
Disclosure is very important for a person who is interested in either investing or perhaps opening up their own Starbucks. Starbucks has at least 15 pages of notes for disclosure of Starbucks financial statements that have been consolidated. The notes were very informative for the reader and helped to clarify where the figures came from.
Reference
Financial Accounting Standards Board (FASB). (2008). Summary of Statement No. 132 (revised 2003) Employers’ Disclosures about Pensions and Other Postretirement Benefits—an amendment of FASB Statements No. 87, 88, and 106 (Issued 12/03. Retrieved Saturday, September 13, 2008 from
The full disclosure principle in accounting states that future events which could occur or may occur within a company, and will have a material economic impact on the …show more content…
They have stored value cards that are Starbucks Card, gift certificates. These cards and gift certificates do not have any expiration and not service fee on customer balances. These balances are added to “Deferred revenue” on the balance sheet of starbucks consolidated financial statements. Starbucks uses retail revenue at the point of sale for their retail stores. They also have a sales return allowance to help reduce retail returns on their products at a future date. The revenue from retail stores are reported net of sales. In the notes another area that is discussed is specialty revenues. These revenues are basically sales to customers that are not through company-operated retail stores. These include sales of coffee, tea and other related products are recognized upon shipment to the customer. The shipping charges are recognized as revenue too. Starbucks individually looks at other arrangements that involve multiple elements and deliverables that might have upfront fees for revenue recognition. When the company receives cash in advance for services or products this is recorded in “deferred revenues”. (Starbucks, …show more content…
Since September, 2007 the company is dedicated to purchasing green coffee cost $324 million at a fixed-price contract. According to the notes Starbucks inventory is lower of cost (primarily moving average cost). Inventory reserves are based on the trends and historical experience. Starbucks records inventory reserves as outdated or slow moving items and for estimated shrinkage between physical inventory counts.
Conclusion
Disclosure is very important for a person who is interested in either investing or perhaps opening up their own Starbucks. Starbucks has at least 15 pages of notes for disclosure of Starbucks financial statements that have been consolidated. The notes were very informative for the reader and helped to clarify where the figures came from.
Reference
Financial Accounting Standards Board (FASB). (2008). Summary of Statement No. 132 (revised 2003) Employers’ Disclosures about Pensions and Other Postretirement Benefits—an amendment of FASB Statements No. 87, 88, and 106 (Issued 12/03. Retrieved Saturday, September 13, 2008 from