Costco 2008 Annual Report Download - page 58

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2008, reflecting the real property impairment estimate, primarily related to a warehouse that was
demolished and is being rebuilt. No impairment charges for long-lived assets were recorded in 2007 or
2006.
Other Assets
Other assets consist of the following at the end of 2008 and 2007:
2008 2007
Investment in Costco Mexico ............................. $364,444 $302,550
Prepaid rents, lease costs and long-term deposits ........... 167,122 210,733
Cash surrender value insurance .......................... 90,754 90,667
Goodwill, net .......................................... 73,707 75,707
Long-term investments .................................. 68,022 —
Notes receivable ....................................... 58,874 46,025
Other ................................................ 42,384 36,971
Other Assets ...................................... $865,307 $762,653
The Company’s investments in Costco Mexico, a 50%-owned joint venture, and in other
unconsolidated joint ventures that are less than majority owned are accounted for under the equity
method. The equity in earnings of Costco Mexico is included in interest income and other in the
accompanying consolidated statements of income, and for 2008, 2007 and 2006, was $40,424,
$33,499 and $26,646, respectively. The amount of retained earnings that represents undistributed
earnings of Costco Mexico was $233,600 and $193,176 at the end of 2008 and 2007, respectively. The
investments and equity in earnings of other unconsolidated joint ventures are not material.
During 2006, the Company contributed an additional $15,000 to its investment in Costco Mexico, which
did not impact its percentage ownership of this entity, as the joint venture partner contributed a like
amount. The Company did not contribute additional capital in 2007 or 2008.
The Company adjusts the carrying value of its life insurance contracts to the cash surrender value at
the end of each reporting period. The adjustment reflects changes in the market values of the
underlying investment securities and is included in selling, general and administrative expenses. The
performance of the investment portfolio associated with these contracts is subject to conditions
generally affecting equity and debt markets.
Goodwill resulting from certain business combinations is reviewed for impairment in the fourth quarter
of each fiscal year, or more frequently if circumstances dictate. No impairment of goodwill has been
incurred to date.
Notes receivable generally represent amounts due from cities over a number of years representing
incentive amounts granted to the Company when a new location was opened, or for the repayment of
certain infrastructure initially paid for by the Company.
Accounts Payable
The Company’s banking system provides for the daily replenishment of major bank accounts as
checks are presented. Accordingly, included in accounts payable at the end of 2008 and 2007 are
$639,881 and $591,936, respectively, representing the excess of outstanding checks over cash on
deposit at the banks on which the checks were drawn.
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