AJEs are required when there is a difference between the timing of cash in (or out) of the company and the recognition of revenue (or expense). Review the Starbucks 10-K and answer the following (you may copy and paste the following into your reply to organize your response):

1. Identify the largest accrued expense as of the end of their 2013 year (amount and description).

2. What is the balance of this same accrual at the end of the 2014 year?

3. During what year did this accrual impact net income?

4. During what year was this expense paid?

5. Using your own words, describe why an AJE was required in this situation.

CONSOLIDATED STATEMENTS OF EARNINGSSTARBUCKS CORPORATION

(in millions, except per share data)

Fiscal Year Ended	Sep 28, 2014				Sep 29, 2013				Sep 30, 2012
Net revenues:
Company-operated stores	$	12,977.9			$	11,793.2			$	10,534.5
Licensed stores	1,588.6				1,360.5				1,210.3
CPG, foodservice and other	1,881.3				1,713.1				1,532.0
Total net revenues	16,447.8				14,866.8				13,276.8
Cost of sales including occupancy costs	6,858.8				6,382.3				5,813.3
Store operating expenses	4,638.2				4,286.1				3,918.1
Other operating expenses	457.3				431.8				407.2
Depreciation and amortization expenses	709.6				621.4				550.3
General and administrative expenses	991.3				937.9				801.2
Litigation charge/(credit)	(20.2		)		2,784.1
Total operating expenses	13,635.0				15,443.6				11,490.1
Income from equity investees	268.3				251.4				210.7
Operating income/(loss)	3,081.1				(325.4		)		1,997.4
Interest income and other, net	142.7				123.6				94.4
Interest expense	(64.1		)		(28.1		)		(32.7		)
Earnings/(loss) before income taxes	3,159.7				(229.9		)		2,059.1
Income tax expense/(benefit)	1,092.0				(238.7		)		674.4
Net earnings including noncontrolling interests	2,067.7				8.8				1,384.7
Net earnings/(loss) attributable to noncontrolling interests	(0.4		)		0.5				0.9
Net earnings attributable to Starbucks	$	2,068.1			$	8.3			$	1,383.8
Earnings per share basic	$	2.75			$	0.01			$	1.83
Earnings per share diluted	$	2.71			$	0.01			$	1.79
Weighted average shares outstanding:
Basic	753.1				749.3				754.4
Diluted	763.1				762.3				773.0