Starbucks largest coffee brand in the world”.

Starbucks opened their first coffee shop in 1971 in Pike Place Market, Washington. Within three years of opening their doors, they started mass producing their coffee to shops across the United States (Starbucks, 2018). Coffee is a product that over 80% of the world consumes daily. Approximately eight-million Starbucks coffee drinks are served within a day. Starbucks has become the leading coffee shop in the nation. Within the last decade, Starbucks has tripled with locations opening and operations of keeping Starbucks as a top coffee producing shop. Overall, Starbucks goals to keep increasing their profits and minimizing their debt.
For Starbucks to continue to grow and produce their market; they market their products in licensed stores, grocery stores, and many food service services. They intend to maintain as being labeled “The largest coffee brand in the world”. The Financial Accounting Standards Board (FASB) is the independent, private sector, not-for-profit organization. This board establishes financial accounting and reporting standards for public and private companies and not-for-profit organizations that follow Generally Accepted Accounting Principles (GAAP), (FASB, 2018). The accountants of Starbucks help the everyday operations maintained daily. They help provide statements on gaining and losing. They also maintain and managed the valves and assets of properties Starbuck owns. The accountants help produces the statistics of how the locations are producing. They also explain how their profits are overcoming and growing as an organization.
Many large companies use controlled policies in order to remain in compliance with regulatory bodies. Many controls procedures touch on key points, such as; safeguarding, company policies, operational efficiency, reliable accounting recording, and legal requirements. In order to be effective with a company’s internal controls, it must ensure and protect its assets by, segregating employee duties, assigning specific duties to each employee, rotating employee job assignments, and using mechanical devices (Finance Accounting, n.d.). Starbucks has disclosed the control procedures in their 2017 report. The management of internal controls over financial reporting is the process of providing assurance in regarding the reliability of their financial reporting in external purposes with accounting. This auditing entity described the company as “maintained, in all material respects, effective internal control over financial reporting as of October 1, 2017, based on the criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission,” (Starbucks Corporation, 2017).
Starbucks uses segments as revenue, expenses, results, assets and liabilities. The regulations require companies to disclose information based on the internal information of the operating segments. Segments allow companies to be transparent with each other. The four operating segments for Starbucks are the Americas, China/Asia Pacific, Europe/Middle East/and Africa, and channel development (Starbucks Corporation, 2017). Based on these results in Note 16 of Starbucks 2017 fiscal report. Revenues are shown based on the global location of Starbucks customers. Revenues from countries other than the U.S. consist primarily of revenues from Japan, Canada, China and the U.K., which together account for approximately 77% of net revenues from other countries for fiscal 2017 (Starbucks Corporation, 2017). This reporting segments is a very important for investors to monitor the system of all revenue that Starbucks consumes.
Starbucks has to prepare their statement based on the GAAP to stay compliant with the regulations. According to Starbucks 2017 fiscal year report, examples of their reporting estimates and assumptions estimates for inventory reserves, asset and goodwill impairments. Additionally, assumptions of underlying self-insurance reserves, income from unredeemed stored value cards, stock-based compensation forfeiture rates, future asset retirement obligations and the potential outcome of future tax consequences of events that have been recognized in the financial statements (Starbucks Corporation, 2017). The GAAP requires companies to use a standard basis of accounting that recognizes revenue and expenses as they occur even if cash has changed hands. When using estimates, it is important to use estimates for investors to make decisions based on the financial statements that are interested in the standing or future standing.
The fair valve accounting is a reporting approach is required to report measures and ongoing assets and liabilities at estimates of prices that would be received to sell the asset or pay if they were to be relieved of the liabilities. Starbucks implements all three approaches. Starbucks reporting of level one uses quoted prices in active markets for identical assets to determine fair value (Starbucks Corporation, 2017). Level two, “estimates are based on other observable outputs (e.g., prices for similar assets)” (Harrison et al., 2015). Starbucks stated, for level two, to determine the fair value of their available-for-sale securities and over-the-counter forward contracts are based on quoted market price. Level three, “is fair value determined by estimates on unobservable items (e.g., the companies own estimates based on assumptions),” (Harrison et al., 2015). Starbucks uses this method also by determining the fair value of their auction rate securities using an internally developed valuation model, using inputs that include interest rate curves, credit and liquidity spreads (Starbucks Corporation, 2017).
In conclusion, Starbucks has been and will continue to perform above and beyond average. Stated in the financial report, Starbucks has proven that they follow the guidelines and regulations put forth by GAAP. They show that they represent themselves and their investments at fair valve.


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