Costco 2009 Annual Report Download - page 54

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COSTCO WHOLESALE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions, except share data)
Note 1—Summary of Significant Accounting Policies
Basis of Presentation
The consolidated financial statements include the accounts of Costco Wholesale Corporation, a
Washington corporation, and its subsidiaries (“Costco” or the “Company”). All material inter-company
transactions among the Company and its subsidiaries have been eliminated in consolidation.
Costco operates membership warehouses that offer low prices on a limited selection of nationally
branded and select private label products in a wide range of merchandise categories in no-frills, self-
service facilities. At August 30, 2009, Costco operated 527 warehouses in 40 states and Puerto Rico
(406 locations), nine Canadian provinces (77 locations), the United Kingdom (21 locations), Japan
(nine locations), Korea (seven locations), Taiwan (six locations) and Australia (one location), as well as
32 locations in Mexico, through a 50%-owned joint venture.
In connection with the adoption of Financial Accounting Standards Board (FASB) Interpretation No. 48,
“Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109” (FIN 48),
the Company adjusted its beginning retained earnings balance for fiscal 2008 in the accompanying
consolidated financial statements. See Note 9 for further discussion.
Fiscal Year End
The Company’s fiscal year ends on the Sunday closest to August 31. References to 2009, 2008 and
2007 relate to the 52-week fiscal years ended August 30, 2009, August 31, 2008, and September 2,
2007, respectively.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting
principles requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Reclassifications
Certain reclassifications have been made to prior fiscal year amounts or balances to conform to the
presentation adopted in the current fiscal year.
Cash and Cash Equivalents
The Company considers as cash and cash equivalents all highly liquid investments with a maturity of
three months or less at the date of purchase and proceeds due from credit and debit card transactions
with settlement terms of less than one week. Of the total cash and cash equivalents of $3,157 at
August 30, 2009 and $2,619 at August 31, 2008, credit and debit card receivables were $758 and
$788, respectively.
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