Coca Cola 2003 Annual Report Download - page 62

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Coca-Cola Company and Subsidiaries
NOTE 1: ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
charged to the provision for doubtful accounts. We calculate this allowance based on our history of write-offs,
level of past due accounts and our relationships with and economic status of the customers.
Inventories
Inventories consist primarily of raw materials, supplies, concentrates and syrups and are valued at the lower
of cost or market. We determine cost on the basis of average cost or first-in, first-out methods.
Recoverability of Equity Method and Cost Method Investments
Management periodically assesses the recoverability of our Company’s equity method and cost method
investments. For publicly traded investments, readily available quoted market prices are an indication of the fair
value of our Company’s investments. For non–publicly traded investments, management assesses fair value
based on valuation methodologies, as appropriate, including discounted cash flows, estimates of sales proceeds
and external appraisals, as appropriate. If an investment is considered to be impaired and the decline in value is
other than temporary, we record an appropriate write-down.
Other Assets
Our Company advances payments to certain customers for marketing to fund future activities intended to
generate profitable volume and expenses such payments over the applicable period. Advance payments are also
made to certain customers for distribution rights. Additionally, our Company invests in infrastructure programs
with our bottlers that are directed at strengthening our bottling system and increasing unit case volume.
Management periodically evaluates the recoverability of these assets by preparing estimates of sales volume, the
resulting gross profit, cash flows and other factors. The costs of these programs are recorded in prepaid expenses
and other assets and noncurrent other assets and are subsequently amortized over the periods to be directly
benefited. Amortization expense for infrastructure programs was $156 million, $176 million and $222 million,
respectively, for the years ended December 31, 2003, 2002 and 2001. Refer to Note 2.
Property, Plant and Equipment
We state property, plant and equipment at cost and depreciate such assets principally by the straight-line
method over the estimated useful lives of the assets. Management assesses the recoverability of the carrying
amount of property, plant and equipment if certain events or changes occur, such as a significant decrease in
market value of the assets or a significant change in the business conditions in a particular market.
Goodwill, Trademarks and Other Intangible Assets
Effective January 1, 2002, our Company adopted SFAS No. 142, ‘‘Goodwill and Other Intangible Assets.’’
The adoption of SFAS No. 142 required an initial impairment assessment involving a comparison of the fair
value of goodwill, trademarks and other intangible assets to current carrying value. Upon adoption, we recorded
a loss for the cumulative effect of accounting change for SFAS No. 142, net of income taxes, of $367 million for
Company operations and $559 million for equity investees. We did not restate prior periods for the adoption of
SFAS No. 142.
Trademarks and other intangible assets determined to have indefinite useful lives are not amortized. We
test such trademarks and other intangible assets with indefinite useful lives for impairment annually, or more
frequently if events or circumstances indicate that an asset might be impaired. Trademarks and other intangible
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