1 / 18

Beverages – Soft Drinks Industry Module 11: Adjusting Accounting Information

Beverages – Soft Drinks Industry Module 11: Adjusting Accounting Information. Megan Morava. Background. World’s largest beverage company License and market 500 nonalcoholic beverage brands Primarily sparkling beverages Coca-Cola, Diet Coke, Fanta , Sprite Market, manufacture, and sell:

read
Download Presentation

Beverages – Soft Drinks Industry Module 11: Adjusting Accounting Information

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Beverages – Soft Drinks Industry Module 11: Adjusting Accounting Information Megan Morava

  2. Background • World’s largest beverage company • License and market 500 nonalcoholic beverage brands • Primarily sparkling beverages • Coca-Cola, Diet Coke, Fanta, Sprite • Market, manufacture, and sell: • Beverage concentrates and syrups • Finished sparkling and still beverages • Revenues in 2013: $48 billion, 2.42% decrease • Acquired CCE’s North American operations in 2010

  3. Adjustments • Inventory method • Uses FIFO – no adjustment needed • Operating Leases • Share-based compensation

  4. Operating Leases • Determine the discount rate • Use Coca-Cola’s cost of debt capital • rD = 1.22% • From Note 11:

  5. Operating Leases • Compute the present value of future lease payments

  6. Operating Leases • Adjust Balance Sheet • Increase NEA to include additional enterprise asset • Increase NFL to include financing liability

  7. Operating Leases • Adjust Income Statement to include depreciation and interest • Remove operating lease payment from SG&A • Reclassify as interest and depreciation expense (1,000*1.22%)*(1-.37) [233-(1,000/8.136)]*(1-.37)

  8. Operating Leases • Journal Entries

  9. Share-Based Compensation From Footnote 12:

  10. Share-Based Compensation $41.31 $37.60

  11. Share-Based Compensation • 1) Value of options exercisable at beginning of year • 194($37.60-$24.92)=$2,460

  12. Share-Based Compensation • 2) Value of options exercisable at beginning of year using end of year prices • 194($41.31-$25.87)=$2,995

  13. Share-Based Compensation • 3) Estimated value of exercised options • 53($39.46-$25.02)=$765

  14. Share-Based Compensation • 4) Value of options cancelled during the year • 7($39.46-$34.34)=$36

  15. Share-Based Compensation • 5) Value of options exercisable at end of year • 187($41.31-$25.87)=$2,887

  16. Share-Based Compensation Effect of change in exercisable options [(5)-(2)]+[(3)+(4)] Effect of exercising & cancellation • Adjustments

  17. Share-Based Compensation • Journal Entries

  18. Questions?

More Related