Coca Cola 2004 Annual Report Download - page 73

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Coca-Cola Company and Subsidiaries
NOTE 1: ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
negotiations between affected parties and governmental actions. Management assesses the probability of loss for
such contingencies and accrues a liability and/or discloses the relevant circumstances, as appropriate. Refer to
Note 11.
Business Combinations
In accordance with SFAS No. 141, ‘‘Business Combinations,’’ we account for all business combinations by
the purchase method. Furthermore, we recognize intangible assets apart from goodwill if they arise from
contractual or legal rights or if they are separable from goodwill.
New Accounting Standards
Effective January 1, 2003, the Company adopted SFAS No. 146, ‘‘Accounting for Costs Associated with Exit
or Disposal Activities.’’ SFAS No. 146 addresses financial accounting and reporting for costs associated with exit
or disposal activities and nullifies Emerging Issues Task Force (‘‘EITF’’) Issue No. 94-3, ‘‘Liability Recognition
for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs
Incurred in a Restructuring).’’ SFAS No. 146 requires that a liability for a cost associated with an exit or disposal
plan be recognized when the liability is incurred. Under SFAS No. 146, an exit or disposal plan exists when the
following criteria are met:
• Management, having the authority to approve the action, commits to a plan of termination.
• The plan identifies the number of employees to be terminated, their job classifications or functions and
their locations, and the expected completion date.
• The plan establishes the terms of the benefit arrangement, including the benefits that employees will receive
upon termination (including but not limited to cash payments), in sufficient detail to enable employees to
determine the type and amount of benefits they will receive if they are involuntarily terminated.
• Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will
be made or that the plan will be withdrawn.
SFAS No. 146 establishes that fair value is the objective for initial measurement of the liability. In cases
where employees are required to render service beyond a minimum retention period until they are terminated in
order to receive termination benefits, a liability for termination benefits is recognized ratably over the future
service period. Under EITF Issue No. 94-3, a liability for the entire amount of the exit cost was recognized at the
date that the entity met the four criteria described above. Refer to Note 17.
Effective January 1, 2003, our Company adopted the recognition and measurement provisions of FASB
Interpretation No. 45, ‘‘Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others’’ (‘‘Interpretation 45’’). This interpretation elaborates on the disclosures to
be made by a guarantor in interim and annual financial statements about the obligations under certain guarantees.
Interpretation 45 also clarifies that a guarantor is required to recognize, at the inception of a guarantee, a liability
for the fair value of the obligation undertaken in issuing the guarantee. The initial recognition and initial
measurement provisions of this interpretation are applicable on a prospective basis to guarantees issued or
modified after December 31, 2002. We do not currently provide significant guarantees on a routine basis. As a
result, this interpretation has not had a material impact on our consolidated financial statements.
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