Case Starbucks Essay

a. Assuming that Starbucks had no signifi stopt permanent differences surrounded by check income and valueable income, did income forrader imposees for fiscal reportage exceed or fall gip of appraiseation tax incomeable 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 adjustment to network income for deferred taxes to compute capital flow from operations in the statement of cash flows result in an addition or discount for 2012? There 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 expense as it uses rental facilities tho cig atomic number 18ttenot claim an income tax deduction until it pays cash to the landlord. Suggest the scenario that would refund rise to a deferred tax summation instead of a deferred tax liability li nk up to occupancy cost accumulated Occupancy Cost. No lease compensation in the beginning of the rent. As a result, the company recognizes rent expense anterior for financial report than for income tax reportage in order for Starbucks to report deferred tax assets.d. Starbucks recognizes an expense related to privacy benefits as employees rendered services but cannot claim an income tax deduction until it pays cash to a retreat fund. why do the deferred taxes for deferred compensation turn up as a deferred tax asset Accrued Compensation and Related be? 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 later years, it can claim an income tax deduction. The decreasing arrive of the deferred tax asset in could be. Starbucks reports deferred tax income for sales of stored value cards, such as the Starbucks Card and gift certificates.These amounts are taxed when collected, but not recognized in financial reporting income until tendered at a store. Why does the tax effect of deferred revenue wait 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 give birth the cash. So the tax can be deferred until they get the cash. g. Starbucks recognizes a valuation recompense on its deferred tax assets to reflect net operate losses of consolidated foreign subsidiaries. Presumably, these are included in Other deferred tax assets. Why might the valuation allowance have financial increase between 2011 and 2012?(no idea)h. Starbucks uses the straight-line depreciation method for financial reporting and accelerated depreciation for income tax reporting. alike(p) most firms, the largest deferred tax liability is for post plant and equipment (depreciation). Explain how depreciation leads to a deferred tax liability. Suggest possible reasons why the am ount of the deferred tax liability related to depreciation change magnitude between 2011 and 2012. Starbucks uses contrary depreciation method for financial reporting and income tax reporting. So the taxable income on financial statements may lower than on income tax reporting. The difference between is deferred tax liability. The accelerate depreciation calculate to a greater extent with the time, so the amount may increased during 2011 to 2012.