Costco 2013 Annual Report Download - page 54

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Other Assets
Other assets consist of the following at the end of 2013 and 2012:
2013 2012
Prepaid rents, lease costs, and long-term deposits. . . . . . . . . . . . . . . . . . . . . . . . . $ 236 $ 230
Receivables from governmental entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128 225
Cash surrender value of life insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 76
Goodwill, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 66
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 56
Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 562 $ 653
Receivables from governmental entities largely consists of various tax-related items including amounts
deposited with taxing authorities in connection with ongoing income tax audits and non-current deferred tax
assets. 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. 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.
Accounts Payable
The Company’s banking system provides for the daily replenishment of major bank accounts as checks are
presented. Included in accounts payable at the end of 2013 and 2012 are $493 and $565, 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 subsidiary and participation in a reinsurance pool, to provide for potential liabilities for
workers’ compensation, general liability, property damage, directors’ and officers’ liability, vehicle liability,
and employee health care benefits. 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 2013 and 2012, these insurance liabilities were $727 and $688 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.
The Company’s wholly-owned captive insurance subsidiary (the captive) receives direct premiums, which
are netted against the Company’s premium costs in selling, general and administrative expenses, in the
consolidated statements of income. The captive participates in a reinsurance program that includes other
third-party members. 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 calendar year. The member
agreements and practices of the reinsurance program limit any participating members’ individual risk. Income
statement adjustments related to the reinsurance program and related impacts to the consolidated balance
sheets are recognized as information becomes known. In the event the Company leaves the reinsurance
program, the Company is not relieved of its primary obligation to the policyholders for activity prior to the
termination of the annual agreement.