Costco 2009 Annual Report Download - page 64

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In May 2009, the FASB issued SFAS No. 165, “Subsequent Events” (SFAS 165), which establishes
general standards of accounting for and disclosure of events that occur after the balance sheet date
but before financial statements are issued or are available to be issued. SFAS 165 applies
prospectively to both interim and annual financial periods ending after June 15, 2009. The Company
adopted these new requirements in its fourth quarter of 2009. Adoption of this standard had no material
impact on the Company’s consolidated financial statements.
In April 2009, three FASB Staff Positions (FSP) were issued addressing fair value of financial
instruments: FSP FAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the
Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly”
addresses determining fair values in inactive markets; FSP FAS 115-2, “Recognition and Presentation
of Other-Than-Temporary Impairments” addresses other-than-temporary impairments for debt
securities; and FSP FAS 107-1, “Disclosures about Fair Value of Financial Instruments” requires
interim disclosures about fair value of financial instruments. The Company adopted these FSPs in its
fourth quarter of 2009, with no material impact on the Company’s consolidated financial statements.
In September 2006, the FASB issued SFAS No 157, “Fair Value Measurements” (SFAS 157), which
establishes a framework for measuring fair value and requires expanded disclosures regarding fair
value measurements. In February 2008, the FASB issued FSP FAS 157-2, “Effective Date of FASB
Statement 157” (FSP 157-2), which allows for the deferral of the adoption date of SFAS 157 for all
nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair
value in the financial statements on a recurring basis. The Company elected to defer the adoption of
SFAS 157 for the assets and liabilities within the scope of FSP 157-2 until August 31, 2009, the
beginning of its fiscal year 2010. In October 2008, the FASB issued FSP FAS 157-3, “Determining the
Fair Value of a Financial Asset in a Market That Is Not Active” (FSP 157-3), which clarifies the
application of SFAS 157 when the market for a financial asset is inactive. The adoption of SFAS 157
for those assets and liabilities not subject to the deferral permitted by FSP 157-2 did not have a
material impact on the Company’s financial position or results of operations and is summarized in Note
3. The Company does not expect the adoption of SFAS 157 for non-financial assets and liabilities to
have a material impact on its consolidated financial statements.
In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated
Financial Statements, an Amendment of Accounting Research Bulletin No 51” (SFAS 160). SFAS 160
establishes accounting and reporting standards for ownership interests in subsidiaries held by parties
other than the parent, changes in a parent’s ownership of a noncontrolling interest, calculation and
disclosure of the consolidated net income attributable to the parent and the noncontrolling interest,
changes in a parent’s ownership interest while the parent retains its controlling financial interest and
fair value measurement of any retained noncontrolling equity investment. SFAS 160 is effective for
financial statements issued for fiscal years beginning after December 15, 2008, and interim periods
within those fiscal years. Early adoption is prohibited. The Company must adopt these new
requirements in its first quarter of fiscal 2010. SFAS 160 will change the accounting and reporting for
minority interests, and require expanded disclosure.
In December 2007, the FASB issued SFAS No. 141R, “Business Combinations” (SFAS 141R), which
establishes principles and requirements for the reporting entity in a business combination, including
recognition and measurement in the financial statements of the identifiable assets acquired, the
liabilities assumed, and any noncontrolling interest in the acquiree. SFAS 141R applies prospectively to
business combinations for which the acquisition date is on or after the beginning of the first annual
reporting period beginning on or after December 15, 2008, and interim periods within those fiscal
years. The Company must adopt these new requirements in its first quarter of fiscal 2010.
Except as noted above, the Company is in the process of evaluating the impact that adoption of these
standards will have on its future consolidated financial statements.
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