Case Starbucks Essay

a. Assuming that Starbucks had no signifi brookt unending differences between book income and valueable income, did income before valuatees for mo crystalizeary describe extend or fall short of taxable income for 2012? Explain. Taxable income before income tax is $2,059 million, and taxable income should minus $674.4 million. So income before taxes exceeds taxable income. b. Will the modification to net income for deferred taxes to compute change flow from operations in the narrative of property flows result in an addition or subtraction for 2012? on that point will be a subtraction from net income for deferred taxes to compute cash flow. c. Starbucks rents retail space for its coffee shops. It must recognize rent write down as it uses rental facilities but cannot claim an income tax deduction until it pays cash to the landlord. signal the scenario that would give rise to a deferred tax plus kind of of a deferred tax obligation related to occupancy cost accumulated Occupancy Cost. No lease payment in the beginning of the rent. As a result, the company recognizes rent write down earlier for financial account than for income tax reportage in order for Starbucks to report deferred tax pluss.d. Starbucks recognizes an expense related to retirement benefits as employees rendered services but cannot claim an income tax deduction until it pays cash to a retirement fund. Why do the deferred taxes for deferred stipend appear as a deferred tax asset Accrued earnings and Related Costs? Suggest possible reasons why the deferred tax asset decreased slightly between the end of 2011 and the end of 2012. Company can contribute cash to a retirement fund in subsequent years, it can claim an income tax deduction. The decreasing amount of the deferred tax asset in could be. Starbucks reports deferred tax for sales of stored value cards, such as the Starbucks board and gift certificates.These amounts are taxed when collected, but not recognized in financi al reporting income until tendered at a store. Why does the tax effect of deferred r blushue appear as a deferred tax asset? Why might the value of this deferred tax asset doubled from 2011 to 2012? Because they recognize revenue even they didnt call for the cash. So the tax can be deferred until they get the cash. g. Starbucks recognizes a valuation allowance on its deferred tax assets to reflect net operating losses of consolidatedforeign subsidiaries. Presumably, these are included in Other deferred tax assets. Why might the valuation allowance keep back financial increase between 2011 and 2012?(no idea)h. Starbucks uses the straight-line disparagement method for financial reporting and accelerated derogation for income tax reporting. Like most firms, the largest deferred tax liability is for property plant and equipment (depreciation). Explain how depreciation leads to a deferred tax liability. Suggest possible reasons why the amount of the deferred tax liability related to depreciation increased between 2011 and 2012. Starbucks uses different depreciation method for financial reporting and income tax reporting. So the taxable income on financial statements may humiliate than on income tax reporting. The difference between is deferred tax liability. The accelerate depreciation calculate more with the time, so the amount may increased during 2011 to 2012.