Costco 2011 Annual Report Download - page 57

Other Assets
Other assets consist of the following at the end of 2011 and 2010:
2011 2010
Prepaid rents, lease costs, and long-term deposits .................. $211 $186
Tax-related assets ............................................. 179 18
Goodwill, net ................................................. 74 71
Cash surrender value of life insurance ............................ 64 65
Other ....................................................... 95 96
Investment in Mexico .......................................... 0 357
Other Assets ............................................. $623 $793
As previously discussed, the Company began consolidating Mexico at the beginning of 2011, on a
prospective basis. The amount of retained earnings that represented undistributed earnings of Mexico
was $307 at the end of 2010. The Company did not make any capital contributions to its investment in
Mexico in 2010 or 2009. The investments and equity in earnings of other unconsolidated joint ventures
are not material.
Tax-related assets represent amounts deposited with taxing authorities in connection with ongoing
income tax audits and the Company’s long term deferred tax assets.
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.
The Company adjusts the carrying value of its employee life insurance contracts to the net cash
surrender value at the end of each reporting period.
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 2011 and 2010 are
$108 and $617, respectively, representing the excess of outstanding checks over cash on deposit at
the banks on which the checks were drawn.
Insurance/Self-Insurance Liabilities
The Company uses a combination of insurance and self-insurance mechanisms, including a wholly-
owned captive insurance entity and participation in a reinsurance program, to provide for potential
liabilities for workers’ compensation, general liability, property damage, directors and officers liability,
vehicle liability, and employee health care benefits. The reinsurance agreement is one year in duration
and new agreements are entered into by each participant at their discretion at the commencement of
the next fiscal year. Liabilities associated with the risks that are retained by the Company are not
discounted and are estimated, in part, by considering historical claims experience, demographic
factors, severity factors, and other actuarial assumptions. The estimated accruals for these liabilities
could be significantly affected if future occurrences and claims differ from these assumptions and
historical trends. As of the end of 2011 and 2010, these insurance liabilities were $595 and $541 in the
aggregate, respectively, and were included in accounts payable, accrued salaries and benefits, and
other current liabilities on the consolidated balance sheets, classified based on their nature.
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