Costco 2011 Annual Report Download - page 63

Download and view the complete annual report

Please find page 63 of the 2011 Costco annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 87

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87

In October 2009, the FASB issued amended guidance on revenue recognition for multiple-deliverable
revenue arrangements. Under this guidance, when vendor-specific objective evidence or third-party
evidence for deliverables in an arrangement cannot be determined, a best estimate of the selling price
is required to separate deliverables and allocate arrangement consideration using the relative selling-
price method. This guidance also prescribes disclosure requirements on how the application of the
relative selling price method affects the timing and amount of revenue recognition. The Company
adopted this guidance at the beginning of its fiscal year 2011. The adoption of this standard did not
have a material impact on the Company’s consolidated financial statements.
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. Under Level 3 of the fair value measurement hierarchy, the guidance
requires disclosure of information on purchases, sales, issuances, and settlements on a gross basis
(as opposed to a net basis) in the reconciliation of the assets and liabilities measured. 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 were adopted at the beginning of its third
quarter of fiscal 2011. The adoption of this standard did not have a material impact on the Company’s
consolidated financial statement disclosures.
Recent Accounting Pronouncements Not Yet Adopted
In May 2011, the FASB issued guidance to amend the requirements related to fair value measurement
which changes the wording used to describe many requirements in GAAP for measuring fair value and
for disclosing information about fair value measurements. Additionally, the amendments clarify the
FASB’s intent about the application of existing fair value measurement requirements. The amended
guidance is effective for interim and annual periods beginning after December 15, 2011, and is applied
prospectively. The Company plans to adopt this guidance at the beginning of its third quarter of fiscal
year 2012. Adoption of this guidance is not expected to have a material impact on the Company’s
consolidated financial statement disclosure.
In June 2011, the FASB issued guidance on presentation of comprehensive income. The new
guidance eliminates the current option to report other comprehensive income and its components in
the statement of changes in equity. Instead, an entity will be required to present either a continuous
statement of net income and other comprehensive income or to present the information in two separate
but consecutive statements. The new guidance must be applied retrospectively and is effective for
interim and annual periods beginning after December 15, 2011. The Company plans to adopt this
guidance at the beginning of its third quarter of fiscal 2012. Adoption of this guidance is not expected to
have a material impact on the Company’s consolidated financial statements and will impact the
financial statements’ presentation only.
In September 2011, the FASB issued guidance to amend and simplify the rules related to testing
goodwill for impairment. The revised guidance allows an entity to make an initial qualitative evaluation,
based on the entity’s events and circumstances, to determine whether it is more likely than not that the
fair value of a reporting unit is less than its carrying amount. The results of this qualitative assessment
determine whether it is necessary to perform the currently required two-step impairment test. The new
guidance is effective for annual and interim goodwill impairment tests performed for fiscal years
beginning after December 15, 2011. Early adoption is permitted. The Company plans to early adopt
this guidance for its fiscal year 2012 annual impairment test. Adoption of this guidance is not expected
to have a material impact on the Company’s consolidated financial statements.
61