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Case Write-Up

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Submitted By linkido
Words 632
Pages 3
Date: 4/14/2012
From: Liang Haoxuan, Lin juan, Lin ying, Li qi
To: Professor Chen
Re: The 2nd case STARBUCKS

Brief:
The case includes some proposals from the IFRS about the lease accounting and a response from the Starbucks in which the Starbucks expressed its negative attitude and its reasons why it oppose those proposals. Then, in this write-up, our group is going to analysis the influence of leases and lease accounting on Starbucks.
The importance of lease on Starbucks
From the case, we know that Starbucks leases retail stores, roasting and distribution facilities and office space etc. After an explicit analysis and detailed discussion, we also understand that these lease related activities and issues play a very important role in Starbucks’ business activities.
After an introductory accounting course we had taken, we realize that leasing can reduce risk of obsolescence. With more leases, there will be little or no down payment. And these positive effects are preferred choices for managers, especially for the Starbucks’ managers who have a lot of leases activities.
Actually lease makes Starbucks hold more available cash which could be invested to other aspects, allowing it to build up more stores and capturing the market rapidly.
Thus, leases are important for Starbucks.
The importance from lease accounting
We already know that many of Starbucks’ business activities are leases, such as leasing retail stores, roasting and distribution facilities and office space etc, so it is better to use lease accounting to accomplish Starbucks’ financial analysis and management.
We also discover an especial phenomenon that operating lease occupies a really significant position in Starbucks’ business and in its similar competitors. And lease accounting becomes more popular and proper in Starbucks’ market circumstance, making it easier to deal with its’

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