Chapter 4, Problem 7C

Analyzing Starbucks’s Accounting Policies

A company must include a summary of its accounting policies in the notes to its financial statements. Starbucks includes this summary as the first note to the consolidated financial statements shown in Appendix A.

Required:

1. 1. Explain what is required to be disclosed about the accounting policies of a company.
2. 2. Review the Starbucks note on its accounting policies and answer the following questions:
   1. a. What items are classified as cash equivalents?
   2. b. How are inventories valued, and what inventory costing method(s) is used?
   3. c. How are property, plant, and equipment stated, and what depreciation method is used?
   4. d. How much is the allowance for doubtful accounts at the end of 2013? What was the amount of gross receivables?
   5. e. When does the company test goodwill for impairment?
   6. f. What items do not appear on the balance sheet as assets or liabilities because the company uses them under operating leases?
   7. g. How does the company account for treasury stock repurchases?