The Second Cup Ltd. is one of Canadas best-known specialty coffee caf franchisors, with cafs operating under
Question:
The Second Cup Ltd. is one of Canada’s best-known specialty coffee café franchisors, with cafés operating under the trade name Second Cup. Exhibit 10.18 is an excerpt from Note 23 from the company’s 2016 annual report detailing Second Cup’s commitments. Amounts are in thousands.
EXHIBIT 10.18 Excerpt from The Second Cup Ltd.’s 2016 Annual Report Contracts are in place with third party companies to purchase the coffee that is sold in all cafés. In terms of these supply agreements, there is a guaranteed minimum value of coffee purchases of $849 USD (2015 – $2,464 USD) for the 12 months.
Required
Explain this note in your own words. Be sure to discuss the financial statement impacts, if any, of this contract and the financial statement impacts it will have in future years.
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To supply the needs of its cafs the Second Cup imports significant quantities of premium coffe...View the full answer
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