Husky Coffee, a specialty coffee store, is considering whether to open a new coffee shop. In this case study we will walk through the financial modeling and search the ASC (or other sources) for guidance on the capital project accounting and lease accounting. This case study should help illustrate: How accounting complexities are closely tied to a company's business model How accounting topics can overlap and influence each other How there can be a lot of grey, even within what would seem to be straight-forward topics when guidance is lacking Background: Husky Coffee has coffee shops in a wide variety of potential store formats, including caf, drive thru, mall stores, and kiosks. The size, product offerings and overall appearance of stores may also vary depending on local factors. While the specifics may differ from store to store, all these formats share certain operational components: Sales: menu, pricing, point-of-sale system, taxes, cash management process (safes, couriers, banks), mobile-order, delivery, rewards plan, stored-value cards Inventory/Cost of Goods Sold (COGS): coffee beans, food, milk, syrups, supplies (cups, straws) Staffing: employees (store manager, shift supervisors, baristas), time and attendance systems Fixed assets: leasehold improvements, furniture and equipment (brewing, espresso, refrigeration, ovens, point-of-sale), equipment maintenance Real estate: building, rent, building maintenance Behind the scenes, many teams support a coffee shop, including coffee sourcing (found in the tropics at high elevations), coffee roasting plants, supply chain (sourcing of milk, food, etc.), distribution, store development (real estate, capital projects, maintenance), innovation/product development, operations, marketing, technology, legal, human resources and (of course) accounting. A company-operated store is fully owned by the retailer. Licensed or franchised stores are operated by a business partner (typically grocery stores, airports, hospitals, theme parks and universities), who purchase product (coffee, food, etc.) from the retailer, operate under the retailer's guidelines and pay a royalty to the retailer based on a percentage gross sales. Husky Coffee always leases its company-operated store locations. Real estate is typically obtained as an "unfinished shell" with just the basic structure and utility connections provided by the landlord. The retailer must invest a significant amount of capital to complete construction and convert the "shell" into a functional and appealing store. Investments almost always include new flooring, ceilings, lighting, furniture, equipment. In some cases, the retailer may even have to build restrooms, walls and other structural aspects.