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, Caleb Yong Product Number: 9B11B014 Publication Date: 08/19/2011 Length: 19 pages Product Type: Case (Library) Source: Ivey The paper depicts a financial analyst trying to make sense of Starbucks' finances and drawing from recent projects of the IASB/FASB to identify lease accounting as a key issue for the firm. The case creates an understanding of the importance of having a full picture of the company's obligations in understanding its overall performance. In reviewing the case students examine Starbuck's extensive use of leases and use spreadsheet tools to understand the full extent of the corporation's indebtedness. Although heavy users of leases, including Starbucks, had argued that lease accounting would be cost prohibitive and complex, an estimation of lease indebtedness can be created using relatively simple tools that can be well understood by students. The case allows high level accounting standards related issues to be drilled down to the individual level, using a well known company with which students identify to illustrate real world consequences of accounting policy choices. Learning Objective: The case addresses lease accounting and develops skills in identifying lease obligations and quantifying indebtedness relating to lease payments. It also gives students insights into the accounting standard setting process and the larger issues of standard setting and accounting policy, showing how these arenas influence our understanding of specific individual firms. The case is used in the introductory MBA core course in Managerial Accounting and Control at the Richard Ivey School of Business. At the undergraduate HBA level the school uses the case in the Corporate Financial Reporting elective concerning financial reporting practices. The case underscores the role of accounting policies and standards in shaping our understanding of corporations. It makes students aware of the larger institutional frameworks within which accounting operates. It also demonstrates how the accounting treatment of certain forms of financing may have been key to their popularity, a potential answer to the question of whether accounting matters.