Coca Cola 2014 Annual Report Download - page 85

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Property, Plant and Equipment
Property, plant and equipment are stated at cost. Repair and maintenance costs that do not improve service potential or extend
economic life are expensed as incurred. Depreciation is recorded principally by the straight-line method over the estimated useful lives
of our assets, which are reviewed periodically and generally have the following ranges: buildings and improvements: 40 years or less;
and machinery, equipment and vehicle fleet: 20 years or less. Land is not depreciated, and construction in progress is not depreciated
until ready for service. Leasehold improvements are amortized using the straight-line method over the shorter of the remaining lease
term, including renewals that are deemed to be reasonably assured, or the estimated useful life of the improvement. Depreciation is
not recorded during the period in which a long-lived asset or disposal group is classified as held for sale, even if the asset or disposal
group continues to generate revenue during the period. Depreciation expense, including the depreciation expense of assets under
capital lease, totaled $1,716 million, $1,727 million and $1,704 million in 2014, 2013 and 2012, respectively. Amortization expense for
leasehold improvements totaled $20 million, $16 million and $19 million in 2014, 2013 and 2012, respectively.
Certain events or changes in circumstances may indicate that the recoverability of the carrying amount of property, plant and
equipment should be assessed, including, among others, a significant decrease in market value, a significant change in the business
climate in a particular market, or a current period operating or cash flow loss combined with historical losses or projected future
losses. When such events or changes in circumstances are present, we estimate the future cash flows expected to result from the use of
the asset or asset group and its eventual disposition. These estimated future cash flows are consistent with those we use in our internal
planning. If the sum of the expected future cash flows (undiscounted and without interest charges) is less than the carrying amount, we
recognize an impairment loss. The impairment loss recognized is the amount by which the carrying amount exceeds the fair value. We
use a variety of methodologies to determine the fair value of property, plant and equipment, including appraisals and discounted cash
flow models, which are consistent with the assumptions we believe hypothetical marketplace participants would use. Refer to Note 7.
Goodwill, Trademarks and Other Intangible Assets
We classify intangible assets into three categories: (1) intangible assets with definite lives subject to amortization, (2) intangible assets
with indefinite lives not subject to amortization and (3) goodwill. We determine the useful lives of our identifiable intangible assets
after considering the specific facts and circumstances related to each intangible asset. Factors we consider when determining useful
lives include the contractual term of any agreement related to the asset, the historical performance of the asset, the Company’s long-
term strategy for using the asset, any laws or other local regulations which could impact the useful life of the asset, and other economic
factors, including competition and specific market conditions. Intangible assets that are deemed to have definite lives are amortized,
primarily on a straight-line basis, over their useful lives, generally ranging from 1 to 20 years. Refer to Note 8.
When facts and circumstances indicate that the carrying value of definite-lived intangible assets may not be recoverable, management
assesses the recoverability of the carrying value by preparing estimates of sales volume and the resulting profit and cash flows. These
estimated future cash flows are consistent with those we use in our internal planning. If the sum of the expected future cash flows
(undiscounted and without interest charges) is less than the carrying amount, we recognize an impairment loss. The impairment
loss recognized is the amount by which the carrying amount of the asset or asset group exceeds the fair value. We use a variety of
methodologies to determine the fair value of these assets, including discounted cash flow models, which are consistent with the
assumptions we believe hypothetical marketplace participants would use.
We test intangible assets determined to have indefinite useful lives, including trademarks, franchise rights and goodwill, for
impairment annually, or more frequently if events or circumstances indicate that assets might be impaired. Our Company performs
these annual impairment reviews as of the first day of our third fiscal quarter. We use a variety of methodologies in conducting
impairment assessments of indefinite-lived intangible assets, including, but not limited to, discounted cash flow models, which are
based on the assumptions we believe hypothetical marketplace participants would use. For indefinite-lived intangible assets, other than
goodwill, if the carrying amount exceeds the fair value, an impairment charge is recognized in an amount equal to that excess.
The Company has the option to perform a qualitative assessment of indefinite-lived intangible assets, other than goodwill, prior to
completing the impairment test described above. The Company must assess whether it is more likely than not that the fair value of the
intangible asset is less than its carrying amount. If the Company concludes that this is the case, it must perform the testing described
above. Otherwise, the Company does not need to perform any further assessment. During 2014, the Company performed qualitative
assessments on less than 10 percent of our indefinite-lived intangible assets balance.