Reference no: EM131676720

Intercorporate Investments Coca Cola

Coca-Cola has substantial investment in equity and debt securities of other companies. Moreover, certain bottling operations in which Coca Cola has a substantial ownership interest are designated as anchor bottlers. Coca Cola's brands are the primary products for these bottlers, and as franchises and strategic partners they derive significant marketing, operating, and financial support from Coca Cola. Anchor bottlers produced and distributed over 40% of Coca Cola's worldwide unit case volume.

Attached are excerpts from Coca-Cola's 2007 financial statements relating to Coca-Cola's investments.

Required:

1. What is the total amount of minority, passive investments in securities of other companies at the end of fiscal 2007?

2. Where are these investments located on Coca-Cola's balance sheet?

3. How are these investments classified by Coca-Cola?

4. What is the total amount of minority, active investments in securities of other companies at the end of fiscal 2007?

5. What amount of earnings did Coca Cola record for equity method investees in fiscal 2007?

6. What was the amount of Coca Cola Enterprises' earnings recorded by Coca Cola in 2007?

7. What amount of earnings did Coca Cola record for equity method investees other than Coca Cola Enterprises in 2007?

8. Did any of Coca Cola's equity method investees pay dividends during 2007? If yes, what was the dollar amount of Coca Cola's share?

9. Suppose that Coca Cola was required (always) to account for all its equity method investments as a passive investment. What amount would Coca Cola show on its Balance Sheet at December 31, 2007?

10. What would Coca Cola's Return-on-Assets be in 2007 under this alternative accounting method? How does this compare to its actual Return-on-Assets? [Use Net Income and the ending balance of Total Assets in your calculation of these two ratios. Ignore income tax effects].

Attachment:- Assignment.rar