Starbucks 2007 Annual Report Download - page 52

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determined the effect on the Company’s consolidated financial statements, if any, upon adoption of SFAS 157, or if
it will adopt the requirements prior to the first fiscal quarter of 2009.
In September 2006, the SEC staff issued Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year
Misstatements when Quantifying Misstatements in Current Year Financial Statements” (“SAB 108”). The intent of
SAB 108 is to reduce diversity in practice for the method companies use to quantify financial statement
misstatements, including the effect of prior year uncorrected errors. SAB 108 establishes an approach that requires
quantification of financial statement errors using both an income statement and cumulative balance sheet approach.
SAB 108 was effective for annual financial statements for fiscal years ending after November 15, 2006, and the
Company adopted the new requirements in fiscal 2007 with no impact to its consolidated financial statements.
In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial
Liabilities” (“SFAS 159”). SFAS 159 permits companies to choose to measure many financial instruments and
certain other items at fair value. SFAS 159 is effective for financial statements issued for fiscal years beginning after
November 15, 2007, or Starbucks first fiscal quarter of 2009. Early adoption is permitted. Starbucks has not yet
determined if it will elect to apply any of the provisions of SFAS 159 or what the effect of adoption of the statement
would have, if any, on its consolidated financial statements.
Note 2: Business Acquisitions
In the first quarter of fiscal 2007, the Company purchased a 90% stake in its previously-licensed operations in
Beijing, China. Due to its majority ownership of these operations, Starbucks applied the consolidation method of
accounting subsequent to the date of acquisition.
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