Visit Costco's internet site at www.costco.com and print out the income statement and footnote #1 on "Significant Accounting Policy" for the year ended August 29,1999. Review these statements and answer the following questions:
1. Examine the footnote on "Significant Accounting Policies". How did Costco account for membership revenue for the year ended August 30, 1998 and for the year ended August 29, 1999?
2. How was the change in accounting for membership revenue in 1999 reflected in the financial statements? What was the cumulative impact of making this change on net income for the year ended August 29, 1999.
3. This event was handled as a change in accounting principle. Do you believe this was a change in accounting principle or a correction of an error?
4. Did this change in accounting principle result in any tax consequences? How did you determine this? What was the dollar amount?