Lululemon Case Study

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1. SAB74 requires companies to disclose the impact of the implementation of accounting standards which are already issued but not yet adopted. Through SAB74 disclosure, financial statements’ users can previously prepare for significant impacts which will be caused by new standards. Companies violate SEC rules and cast negative impression if they cannot disclose the impact of Implementation of new standards appropriately.

2. In FN2, Lululemon discusses the impact of ASU 2014-09 “Revenue from Contracts with Customers”, ASC Topic 842 “Leases”, ASC 718 “Stock Compensation”, ASC 815 “Derivatives and Hedging”, and ASC 220 “Income Statement—Reporting Comprehensive Income”.

3. Lululemon issued the most recent 10Q on May 31, 2018, and this is after the issuance of the most …show more content…
Lululemon in their most recent filing, which is the 1st quarter 10Q, briefly explained the requirement of ASU606 and announced that the company already adopted this new standard on January 29, 2018, through retrospective adjustments. The company also explains the impact of the adoption on its financial statements. Since the company didn’t adopt this new standard as of the issuance of the latest 10k, the face of the footnotes seems different. However, information disclosed in 10K, meaning the companies estimation of the impact of the adoption, is almost the same as the disclosure in 10Q.

5. In its first quarter 10Q, Lululemon briefly describes ASC842 and announces that the adoption of this standard will be the first quarter of the fiscal year 2019. The company states that its assets and liabilities will significantly increase upon the adoption, and this statement is common to the latest 10Q and 10K. However, only in the latest 10Q, the company explains that the company is now adjusting its system to prepare related financial information and is assessing the impact of this adoption on its process and

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