Coca Cola 2007 Annual Report Download - page 78

THE COCA-COLA COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
fair value in our consolidated balance sheets, with fair values of foreign currency derivatives estimated based on quoted
market prices or pricing models using current market rates. Cash flows from derivative instruments designated as net
investment hedges are classified as investing activities. Cash flows from other derivative instruments used to manage
interest, commodity or currency exposures are classified as operating activities. Refer to Note 12.
Retirement-Related Benefits
Using appropriate actuarial methods and assumptions, our Company accounts for defined benefit pension plans in
accordance with SFAS No. 87, “Employers’ Accounting for Pensions,” and we account for our nonpension
postretirement benefits in accordance with SFAS No. 106, “Employers’ Accounting for Postretirement Benefits Other
Than Pensions,” as amended by SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other
Postretirement Plans—an amendment of FASB Statements No. 87, 88, 106, and 132(R).” Effective December 31, 2006
for our Company, SFAS No. 158 required that previously unrecognized actuarial gains or losses, prior service costs or
credits and transition obligations or assets be recognized generally through adjustments to accumulated other
comprehensive income and credits to prepaid benefit cost or accrued benefit liability. As a result of these adjustments,
the current funded status of defined benefit pension plans and other postretirement benefit plans is reflected in the
Company’s consolidated balance sheets as of December 31, 2007 and 2006. Refer to Note 16.
Our equity method investees also adopted SFAS No. 158 effective December 31, 2006. Refer to Note 3 for the
impact on our consolidated balance sheet resulting from the adoption of SFAS No. 158 by our equity method investees.
Contingencies
Our Company is involved in various legal proceedings and tax matters. Due to their nature, such legal proceedings
and tax matters involve inherent uncertainties including, but not limited to, court rulings, 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 13.
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.
Recent Accounting Standards and Pronouncements
In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations.” SFAS No. 141(R)
amends the principles and requirements for how an acquirer recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree and the goodwill
acquired. SFAS No. 141(R) also establishes disclosure requirements to enable the evaluation of the nature and financial
effects of the business combination. SFAS No. 141(R) is effective for our Company on January 1, 2009, and the
Company will apply prospectively to all business combinations subsequent to the effective date.
In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial
Statements—an amendment of Accounting Research Bulletin No. 51.” SFAS No. 160 establishes accounting and
reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS
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