QUESTIONS FOR THRURSDAY
1. Loss contingencies may exist for companies. Write a short memo that answers the following questions.
What conditions should be met for an estimated loss from a loss contingency to be accrued by a charge to income?
When is disclosure required, and what disclosure should be made for an estimated loss from a loss contingency that need not be accrued by a charge to income?
2. Obtain Starbucks’s 2013 annual report either using the “Investor Relations” portion of its web site (do a Web search for Starbucks investor relations) or go to
http://www.sec.gov and click “Search for company filings” under “Filings and Forms (EDGAR).”
1. With regard to Starbucks’s current liabilities: (a) How does Starbucks value its current liabilities and is this valuation justified? (b) What were Starbucks’s
total current liabilities at the end of its 2013 fiscal year? (c) What was the largest current liability? Describe other significant current liabilities as well.
2. What did accrued liabilities consist of at the end of the fiscal year?
3. Is Starbucks involved in litigation? If so, what can be concluded from its disclosures regarding this litigation?
4. Starbucks reported current assets of $5,471.4 million on September 29, 2013, and cost of sales of $6,382.3 million for its 2013 fiscal year. Compute
Starbucks’s current ratio and payables turnover and provide any relevant comments
