Libby_7e_MBA_Companion_Solutions

1 does starbucks sign mainly operating or capital

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Unformatted text preview: rbucks sign mainly operating or capital leases? • Starbucks signs mainly operating leases. Starbucks’ rent expense associated with operating leases is $714.7 million in 2009. Its total capital lease obligation in 2009 is only $7.8 million. 2. Where does Starbucks disclose its operating leases on its balance sheet? • Starbucks does NOT disclose its operating leases on its balance sheet. Only capital leases are disclosed on the balance sheet. Starbucks includes its capital lease assets in “Net, property, plant and equipment” and its capital lease liabilities in two places: the current portion is included in “Other accrued expenses” and the long-term portion is included in “Other long-term liabilities.” 3. Assume a discount rate of 6 percent, and that the amount in the “thereafter” row in Starbucks’ footnote disclosure is equally spread over the years 2015 – 2019. What is the present value of Starbucks’ operating leases at the end of fiscal 2009? • The present value is $3,434.89...
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