Coca Cola 2005 Annual Report Download - page 38

assets and investments in many of these markets. The list in the table below reflects the Company’s carrying
value of noncurrent assets in these markets.
Percentage of
Applicable
Carrying Line Item
December 31, 2005 Value Above
(In millions except percentages)
Tested for impairment when conditions exist that indicate carrying
value may be impaired:
Equity method investments $ 363 6%
Cost method investments, principally bottling companies 36 10
Other assets 31 1
Property, plant and equipment, net 1,663 29
Amortized intangible assets, net (various, principally trademarks) 33 23
Total $ 2,126 14
Tested for impairment at least annually or when events indicate that
an asset may be impaired:
Trademarks with indefinite lives $ 411 21%
Goodwill 165 16
Bottlers’ franchise rights 49 9
Other intangible assets not subject to amortization 42 26
Total $ 667 18
Equity Method and Cost Method Investments
We review our equity and cost method investments in every reporting period to determine whether a
significant event or change in circumstances has occurred that may have an adverse effect on the fair value of
each investment. When such events or changes occur, we evaluate the fair value compared to the carrying value
of the related investments. We also perform this evaluation every reporting period for each investment for which
the carrying value has exceeded the fair value in the prior period. The fair values of most of our Company’s
investments in publicly traded companies are often readily available based on quoted market prices. For
investments in nonpublicly traded companies, management’s assessment of fair value is based on valuation
methodologies including discounted cash flows, estimates of sales proceeds and external appraisals, as
appropriate. We consider the assumptions that we believe hypothetical marketplace participants would use in
evaluating estimated future cash flows when employing the discounted cash flows or estimates of sales proceeds
valuation methodologies. The ability to accurately predict future cash flows, especially in developing and
unstable markets, may impact the determination of fair value.
In the event a decline in fair value of an investment occurs, management may be required to determine if
the decline in fair value is other than temporary. Management’s assessments as to the nature of a decline in fair
value are based on the valuation methodologies discussed above, our ability and intent to hold the investment,
and whether evidence indicating the cost of the investment is recoverable within a reasonable period of time
outweighs evidence to the contrary. We consider most of our equity method investees to be strategic long-term
investments. If the fair value of an investment is less than its carrying value and the decline in value is considered
to be other than temporary, a write-down is recorded. Management’s assessments of fair value represent our
best estimates as of the time of the impairment review and are consistent with the assumptions that we believe
hypothetical marketplace participants would use. If different fair values were estimated, this could have a
material impact on our consolidated financial statements.
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