Coca Cola 2005 Annual Report Download - page 37

estimate when performing recoverability and impairment tests include, among others, sales volume, prices,
inflation, cost of capital, marketing spending, foreign currency exchange rates, tax rates and capital spending.
These factors are often interdependent and therefore do not change in isolation. These factors include inherent
uncertainties, and significant management judgment is involved in estimating their impact. However, when
appropriate, the assumptions we use for financial reporting purposes are consistent with those we use in our
internal planning and we believe are consistent with those that a hypothetical marketplace participant would use.
Management periodically evaluates and updates the estimates based on the conditions that influence these
factors. The variability of these factors depends on a number of conditions, including uncertainty about future
events, and thus our accounting estimates may change from period to period. If other assumptions and estimates
had been used in the current period, the balances for noncurrent assets could have been materially impacted.
Furthermore, if management uses different assumptions or if different conditions occur in future periods, future
operating results could be materially impacted.
Operating in more than 200 countries subjects our Company to many uncertainties and risks related to
various economic, political and regulatory environments. Refer to the headings ‘‘Our Business—Challenges and
Risks’’ above and ‘‘Item 1A. Risk Factors’’ in Part I of this report. As a result, management must make
numerous assumptions which involve a significant amount of judgment when determining the recoverability of
noncurrent assets in various regions around the world.
For the noncurrent assets listed in the table below, we perform tests of impairment, as appropriate. For
applicable assets, we perform tests when certain conditions exist that indicate the carrying value may not be
recoverable. For certain assets, we perform tests at least annually or more frequently if events or circumstances
indicate that an asset may be impaired:
Percentage
Carrying of Total
December 31, 2005 Value Assets
(In millions except percentages)
Tested for impairment when conditions exist that indicate carrying
value may be impaired:
Equity method investments $ 6,562 22%
Cost method investments, principally bottling companies 360 1
Other assets 2,648 9
Property, plant and equipment, net 5,786 20
Amortized intangible assets, net (various, principally trademarks) 146 1
Total $15,502 53%
Tested for impairment at least annually or when events indicate that
an asset may be impaired:
Trademarks with indefinite lives $ 1,946 6%
Goodwill 1,047 3
Bottlers’ franchise rights 521 2
Other intangible assets not subject to amortization 161 1
Total $ 3,675 12%
Many of the noncurrent assets listed above are located in markets that we consider to be developing or to
have changing political environments. These markets include, but are not limited to, Germany, where the
nonrefillable deposit law creates uncertainty; the Middle East and Egypt, where political and civil unrest
continues; the Philippines, where affordable packaging and availability of beverages in the marketplace continue
to impact operating results; India, where affordability and bottler execution issues remain; and certain markets
in Latin America, Asia and Africa, where local economic and political conditions are unstable. We have bottling
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