Chipotle 2006 Annual Report Download - page 51

Chipotle Mexican Grill, Inc.
Notes to Consolidated Financial Statements—(Continued)
(dollar and share amounts in thousands, unless otherwise specified)
In September 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income
Taxes, an interpretation of FASB Statement No. 109 (“FIN 48”). FIN 48 prescribes a recognition threshold and
measurement attribute for recognition and measurement of a tax position taken or expected to be taken in a tax
return. FIN 48 also provides guidance on de-recognition, classification, interest and penalties, accounting in
interim periods, disclosure and transition. The interpretation is effective for fiscal years beginning after
December 15, 2006. The cumulative effect upon adoption of applying the provision shall be reported as an
adjustment to the opening balance of retained earnings for that fiscal year, presented separately. The Company
does not expect the adoption of FIN 48 to have a material impact on its consolidated financial statements.
In September 2006, the FASB issued FASB Staff Position AUG AIR-1, Accounting for Planned Major
Maintenance Activities (“FSP AUG-1”). FSP AUG-1 prohibits the use of the accrue-in-advance method of
accounting for costs of planned major maintenance projects. The statement is effective for fiscal years beginning
after December 15, 2006. The Company does not utilize the accrue-in-advance method and therefore does not
expect the adoption of FSP AUG-1 to have a material impact on its consolidated financial statements.
In September 2006, the FASB issued FASB Standard No. 157, Fair Value Measurements (“FAS 157”). FAS
157 provides a definition of fair value, establishes acceptable methods of measuring fair value and expands
disclosures for fair value measurements. The principles apply under accounting pronouncements which require
measurement of fair value. The Company does not expect the adoption of FAS 157 to have a material impact on
its consolidated financial statements.
In September 2006, the SEC issued Staff Accounting Bulletin No. 108, Considering the Effects of Prior
Year Misstatements when Quantifying Misstatements in Current Year Financial Statements (“SAB 108”). SAB
108 provides guidance on how prior year misstatements should be taken into consideration when quantifying
misstatements in current year financial statements for purposes of determining whether the current year’s
financial statements are materially misstated. SAB 108 permits registrants to record the cumulative effect of
initial adoption by recording the necessary “correcting” adjustments to the carrying values of assets and liabilities
as of the beginning of that year with the offsetting adjustment recorded to the opening balance of retained
earnings only if material under the dual method. SAB 108 is effective for fiscal years ending on or after
November 15, 2006. The Company has assessed the effect of adopting this guidance and has determined that
there will be no impact on the Company’s consolidated financial statements.
3. Leasehold Improvements, Property and Equipment
Leasehold improvements, property and equipment were as follows:
December 31
2006 2005
Land ................................................. $ 8,215 $ 6,557
Leasehold improvements and buildings ..................... 393,980 320,941
Furniture and fixtures ................................... 42,770 36,266
Equipment ............................................ 77,409 63,356
522,374 427,120
Accumulated depreciation ................................ (117,634) (86,426)
$ 404,740 $340,694
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