Starbucks has many fixed assets in its stores. For example, they have various machines to make...

Starbucks has many fixed assets in its stores. For example, they have various machines to make drinks or cook food. Identify one of those pieces of equipment, conduct internet research to estimate a replacement cost if it were destroyed today, assuming it is January 1st (cost). How many years do you estimate it will be functional and useful to help Starbucks produce revenue (estimated usefule life)? In that time period in the future, how much do you think Starbucks can sell it for (salvage value)? ( If the machine price is 24,550.35)

Once you have the cost of a machine, an estimated useful life and a salvage value, calculate the item’s depreciation expense for its first year. Extrapolate your results over all Starbucks stores and determine the affect on the balance sheet and income statements by comparing if the item were to be depreciated using the straightline verse double-declining balance methods, over the estimated cost, estimated useful life and estimated salvage values you choose. You must show calculations. To answer this question, you may have to conduct research to determine the make/model machines they use. If you can’t figure it out, use a close substitute.

Solutions

Expert Solution

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

Question 1. Starbucks has many fixed assets in its stores. For example, they have various machines...

Question 1. Starbucks has many fixed assets in its stores. For example, they have various machines to make drinks or cook food. Identify one of those pieces of equipment, conduct internet research to estimate a replacement cost if it were destroyed today, assuming it is January 1st (cost). How many years do you estimate it will be functional and useful to help Starbucks produce revenue (estimated usefule life)? In that time period in the future, how much do you think...

A 10-yr project has an initial cost of $400,000 for fixed assets. The fixed assets will...

A 10-yr project has an initial cost of $400,000 for fixed assets. The fixed assets will be depreciated to a $0 book value using a 20-yr straight line depreciation method. Each year, annual revenue is $60,000 and cost is $10,000. After 10 years, you will terminate the project. You expect to sell the the fixed assets for $250,000. The project is financed by 40% equity and 60% debt. The required rate of return on equity is 7% and the borrowing...

A 10-yr project has an initial cost of $400,000 for fixed assets. The fixed assets will...

A 10-yr project has an initial cost of $400,000 for fixed assets. The fixed assets will be depreciated to a $0 book value using a 20-yr straight line depreciation method. Each year, annual revenue is $50,000 and cost is $15,000. After 10 years, you will terminate the project. You expect to sell the the fixed assets for $250,000. The project is financed by 40% equity and 60% debt. The required rate of return on equity is 12% and the borrowing...

A 10-yr project has an initial cost of $400,000 for fixed assets. The fixed assets will...

A 10-yr project has an initial cost of $500,000 for fixed assets. The fixed assets will...

A 10-yr project has an initial cost of $500,000 for fixed assets. The fixed assets will be depreciated to a $0 book value using a 20-yr straight line depreciation method. Each year, annual revenue is $50,000 and cost is $15,000. After 10 years, you will terminate the project. You expect to sell the the fixed assets for $350,000. The project is financed by 40% equity and 60% debt. The required rate of return on equity is 7% and the borrowing...

Most people have returned clothing or other items to stores. Many clothes are returned to stores...

Most people have returned clothing or other items to stores. Many clothes are returned to stores after the holidays (e.g., Christmas). Acme holding company is particularly interested in the clothes that have been returned after the holidays. They require their stores to keep records of the number of returned clothing items after the holidays. Acme’s corporate office is worried about a store it recently purchased called Stylish. Stylish seems to have a high proportion of returns for clothing items compared...

An investment fund has the following assets in its portfolio: $52 million in fixed-income securities and...

An investment fund has the following assets in its portfolio: $52 million in fixed-income securities and $52 million in stocks at current market values. In the event of a liquidity crisis, it can sell its assets at a 91 percent discount if they are disposed of in two days. It will receive 93 percent if disposed of in four days. Two shareholders, A and B, own 5 percent and 7 percent of equity (shares), respectively. a. Market uncertainty has caused...

Starbucks has a large, global supply chain that must efficiently supply over 17,000 stores. Although the...

Starbucks has a large, global supply chain that must efficiently supply over 17,000 stores. Although the stores might appear to be very similar, they are actually very different. Depending on the location of the store, its size, and the profile of the customers served, Starbucks management configures the store offerings to take maximum advantage of the space available and customer preferences. Starbucks’ actual distribution system is much more complex, but for the purpose of our exercise let’s focus on a...

Problem: In order to do so Starbucks has closed 900 stores and eliminated 34,000 jobs. Strategy:...

Problem: In order to do so Starbucks has closed 900 stores and eliminated 34,000 jobs. Strategy: Growth strategy of Starbucks is to have more revenue with lower costs. For strategy identification, let’s take a look at the way Starbucks sells their items, increase in their sales rate, attract more customers and advertise more but spend less. Opportunity: Starbucks is refocusing on some of the areas that decrease risk and up-front investment. This includes expanding foreign stores, with aid of partnerships...

We often must make devices, tools, machines. Many times it is due to limited resources. The...

We often must make devices, tools, machines. Many times it is due to limited resources. The answer is based on CREATIVITY Design a micro ruler or pattern that can be used for measuring and calibrating optical / electron microscopes. They exist. Research and make proposal or drawing. I.E What type and size of markings / shapes? We have an air compressor. It is having problems overheating. How should we test what is going wrong with it. What can we do to...

Subjects