Starbucks Corporationlike all other businessesmakes adjustin

Starbucks Corporation—like all other businesses—makes adjusting entries at year-end in order to measure assets, liabilities, revenues, and expenses properly.

Examine Starbucks Corporation’s Balance Sheet and Income Statement. Visit http://www.pearsonhighered.com/Horngren to view a link to Starbucks Corporation’s

Fiscal 2013 Annual Report.

Requirements

1. Which asset accounts might Starbucks record adjusting entries for?

2. Which liability accounts might Starbucks record adjusting entries for?

3. Review Note 1 (Property, Plant, and Equipment) in the Notes to Consolidated Financial Statements. How are property, plant, and equipment carried on the balance sheet? How is depreciation of these assets calculated? What is the range of useful lives used when depreciating these assets?

Solution

1) Starbucks Corporation might record adjusting entries for the following Assets account:-

Intangible assets

Deferred income taxes

Goodwill

Inventories

Long lived assets

2) Starbucks Corporation might record adjusting entries for the following liabilities account:-

Accrued compensation and related costs

Deferred revenue

Other accrued liabilities

Accrued taxes

Long-term debt.

3) Property, plant and equipment are carried at cost less accumulated depreciation.

Depreciation of property, plant and equipment, which includes assets under capital leases, is provided on the straight-line method over estimated useful lives, generally ranging from 2 to 15 years for equipment and 30 to 40 years for buildings.