Integrative Case Study 2.1 Starbucks (p. 145-146) Income Tax Disclosures

Integrative Case Study 2.1 Starbucks (p. 145-146) Income Tax Disclosures

Read pages 145 and 146 in the Wahlen text. Respond to the 7 questions (a through g) using APA style to include at least one citation from the chapter readings and/or the case study that supports or provides evidence for your response to each question. Your response should not be less than 100 words per question. Do not repeat the questions asked (does not count towards answer and work count), but rather identify your response to each question clearly by means of a heading for each question. Finally, make sure you answer all portions of the question(s) asked with ample explanation and detail.

SOLUTION

a. The taxable income exceeded the book income before income taxes for 2011. Because the income taxes that are currently payable exceeded the total income tax expense. Calculate the current payable income tax:Income tax = Current income tax + Federal + State= 344.7 + 61.2 + 37.3= 443.2The amount exceeds the income tax expense that is $563.1

b. The taxable income exceeded book income before income taxes for 2011 because income taxes currently payable exceeded total income tax expense.Currently payable income tax = 344.7 + 61.7 + 37.3= 443.2This amount exceeds the income tax expense that is $563.1

c.Starbucks should evaluate each and every component of deferred tax assets, whether it is correct or not. Then Starbucks should check proportion of deferred tax assets and tax liabilities. Then Starbucks should pay rent in time. Also it can evaluate the tax expense, inwhich field it is investing more, then only it can increase deferred tax assets.

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