Costco 2010 Annual Report Download - page 62

Recently Adopted Accounting Pronouncements
In February 2010, the Financial Accounting Standards Board (FASB) issued amended guidance on
disclosure of subsequent events, eliminating the requirement to disclose the date through which
subsequent events have been evaluated in originally issued and revised financial statements. The
Company adopted this guidance in its second quarter of fiscal 2010.
In January 2010, the FASB issued guidance to amend the disclosure requirements related to recurring
and nonrecurring fair value measurements. The guidance requires disclosure of transfers of assets and
liabilities between Level 1 and Level 2 of the fair value measurement hierarchy, including the reasons
and the timing of the transfers and information on purchases, sales, issuance, and settlements on a
gross basis (as opposed to a net basis) in the reconciliation of the assets and liabilities measured
under Level 3 of the fair value measurement hierarchy. The guidance is effective for annual and interim
reporting periods beginning after December 15, 2009, except for Level 3 (on a gross basis)
reconciliation disclosures, which are effective for annual and interim periods beginning after
December 15, 2010. The Company adopted this guidance at the beginning of its third quarter of fiscal
2010, except for the Level 3 reconciliation disclosures on the roll-forward activities, which it will adopt
at the beginning of its third quarter of fiscal 2011. Other than requiring additional disclosures, adoption
of this guidance did not have and is not expected to have a material impact on the Company’s
consolidated financial statements.
In June 2009, the FASB issued guidance establishing the FASB Accounting Standards Codification as
the source of authoritative GAAP (other than guidance issued by the Securities Exchange Commission
(SEC)) to be used in the preparation of financial statements. The Company adopted these
requirements at the beginning of its fiscal year 2010, as reflected in the notes to the Company’s
consolidated financial statements.
In February 2008, the FASB issued amended guidance surrounding the adoption of fair value
measurements. The amendment allowed for an elected deferral of the adoption 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 adoption at the time of the
amendment. The Company adopted the requirements for all nonfinancial assets and nonfinancial
liabilities in its financial statements at the beginning of its fiscal year 2010. The adoption did not impact
the Company’s consolidated financial statements.
In December 2007, the FASB issued guidance that changed the accounting and reporting of
noncontrolling interests in consolidated financial statements. This guidance requires noncontrolling
interests to be reported as a component of equity separate from the parent’s equity and purchases or
sales of equity interests that do not result in a change in control to be accounted for as equity
transactions. In addition, net income attributable to a noncontrolling interest is to be included in net
income and, upon a loss of control, the interest sold, as well as any interest retained, is to be recorded
at fair value, with any gain or loss recognized in net income. The Company adopted these new
requirements at the beginning of its first quarter of fiscal 2010. In January 2010, the FASB issued
additional guidance on this topic, which clarifies the types of transactions that should be accounted for
as a decrease in ownership of a subsidiary. The Company retrospectively adopted these new
requirements at the beginning of its first quarter of fiscal 2010, as required. The adoption did not have
a material impact on the Company’s consolidated financial statements.
In December 2007, the FASB issued guidance on business combinations. This guidance retains the
fundamental requirements of the acquisition method of accounting (formerly the purchase method) to
account for all business combinations. However, it requires the reporting entity in a business
combination to recognize all identifiable assets acquired, the liabilities assumed, and any
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