Caribou Coffee's Asset Retirement Obligation

When Caribou Coffee announced its recent earnings one thing that stood out was its reference to FIN 47:

Effective October 3, 2005, the Company adopted FASB Financial Interpretation No. 47 ("FIN 47") Accounting for Conditional Asset Retirement Obligations. FIN 47 requires the Company to record an asset and a corresponding liability for the present value of the estimated asset retirement obligation associated with the fixed assets and leasehold improvements at some of our coffeehouse locations. The asset is depreciated over the life of the corresponding lease while the liability accretes to the amount of the estimated retirement obligation. The Company recognized an expense for the cumulative effect of this accounting change in the fourth quarter of 2005 of $0.4 million or ($0.02) per share.

The story also presents Caribou's balance sheet, which includes the following:

Notes payable and capital lease obligations,
less current maturities - 19,923,930
Asset retirement obligation liability 760,997 -
Deferred rent liability 10,485,177 8,420,509
Deferred revenue 2,964,000 3,055,000
Minority interests in affiliates 138,159 217,206
Total long term liabilities 14,348,333 31,616,645