Coca Cola 2013 Annual Report Download - page 82

Summary of Significant Accounting Policies
Basis of Presentation
Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United
States. The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect the
reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our
consolidated financial statements and accompanying notes. Although these estimates are based on our knowledge of current
events and actions we may undertake in the future, actual results may ultimately differ from these estimates and assumptions.
Furthermore, when testing assets for impairment in future periods, if management uses different assumptions or if different
conditions occur, impairment charges may result.
We use the equity method to account for investments in companies, if our investment provides us with the ability to exercise
significant influence over operating and financial policies of the investee. Our consolidated net income includes our Company’s
proportionate share of the net income or loss of these companies. Our judgment regarding the level of influence over each equity
method investment includes considering key factors such as our ownership interest, representation on the board of directors,
participation in policy-making decisions and material intercompany transactions.
We eliminate from our financial results all significant intercompany transactions, including the intercompany transactions with
consolidated variable interest entities (‘‘VIEs’’) and the intercompany portion of transactions with equity method investees.
Certain other amounts in the prior years’ consolidated financial statements and notes have been revised to conform to the current
year presentation.
Principles of Consolidation
Our Company consolidates all entities that we control by ownership of a majority voting interest as well as VIEs for which our
Company is the primary beneficiary. Generally, we consolidate only business enterprises that we control by ownership of a
majority voting interest. However, there are situations in which consolidation is required even though the usual condition of
consolidation (ownership of a majority voting interest) does not apply. Generally, this occurs when an entity holds an interest in
another business enterprise that was achieved through arrangements that do not involve voting interests, which results in a
disproportionate relationship between such entity’s voting interests in, and its exposure to the economic risks and potential
rewards of, the other business enterprise. This disproportionate relationship results in what is known as a variable interest, and the
entity in which we have the variable interest is referred to as a ‘‘VIE.’’ An enterprise must consolidate a VIE if it is determined to
be the primary beneficiary of the VIE. The primary beneficiary has both (1) the power to direct the activities of the VIE that
most significantly impact the entity’s economic performance, and (2) the obligation to absorb losses or the right to receive benefits
from the VIE that could potentially be significant to the VIE.
Our Company holds interests in certain VIEs, primarily bottling and container manufacturing operations, for which we were not
determined to be the primary beneficiary. Our variable interests in these VIEs primarily relate to profit guarantees or
subordinated financial support. Refer to Note 11. Although these financial arrangements resulted in us holding variable interests
in these entities, they did not empower us to direct the activities of the VIEs that most significantly impact the VIEs’ economic
performance. Our Company’s investments, plus any loans and guarantees, related to these VIEs totaled $2,171 million and
$1,776 million as of December 31, 2013 and 2012, respectively, representing our maximum exposures to loss. The Company’s
investments, plus any loans and guarantees, related to these VIEs were not significant to the Company’s consolidated financial
statements.
In addition, our Company holds interests in certain VIEs, primarily bottling and container manufacturing operations, for which we
were determined to be the primary beneficiary. As a result, we have consolidated these entities. Our Company’s investments, plus
any loans and guarantees, related to these VIEs totaled $284 million and $234 million as of December 31, 2013 and 2012,
respectively, representing our maximum exposures to loss. The assets and liabilities of VIEs for which we are the primary
beneficiary were not significant to the Company’s consolidated financial statements.
Creditors of our VIEs do not have recourse against the general credit of the Company, regardless of whether they are accounted
for as consolidated entities.
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