Question

Starbucks Corporation is the premier​ roaster, marketer, and retailer of specialty coffee in the​ world, operating in 68 countries. Starbucks generates revenues through​ company-operated stores, licensed​ stores, and consumer packaged goods. In​ 2015, revenues from​ company-operated stores accounted for​ 79% of total revenues. Starbucks states that its retail objective is to be the leading retailer and brand of coffee and tea by selling the finest quality​ coffee, tea, and related products. In​ addition, the company strives to provide the Starbucks Experience by exemplifying superior customer service and providing clean and​ well-maintained stores. Part of this experience involves providing free internet service to customers while they are enjoying their food and beverages. Read the requirementsLOADING.... Requirement 1. How would the cost of internet service be reported by Starbucks and on which financial​ statement? The cost of internet service would be reported by Starbucks as

Answer 1

Even though the information is not complete, all that we need is included in the question. Starbucks provides free internet service to their customers as part of the Starbucks Experience, therefore, the cost of providing free internet must be reported as an operating expense on the income statement. This cost must be treated similarly to any other operating expense, e.g. cleaning expenses, wages, insurance expense, etc.