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The Following Footnote Appeared in a Recent Annual Report to Stockholders

Question 197

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The following footnote appeared in a recent annual report to stockholders of Starbucks Corporation: "Initial nonrefundable development fees required under licensing agreements are recognized upon substantial performance of services for new market business development activities, such as initial business, real estate, and store development planning, as well as providing operational materials and functional training courses for opening new licensed retail markets. Additional store licensing fees are recognized when new licensed stores are opened."
Briefly explain why Starbucks recognizes this type of revenue as it does.

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Starbucks' revenues from its franchising...

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