Coca Cola 2015 Annual Report Download - page 100

For derivatives that will be accounted for as hedging instruments, the Company formally designates and documents, at inception, the financial instrument as
a hedge of a specific underlying exposure, the risk management objective and the strategy for undertaking the hedge transaction. In addition, the Company
formally assesses, both at the inception and at least quarterly thereafter, whether the financial instruments used in hedging transactions are effective at
offsetting changes in either the fair values or cash flows of the related underlying exposures. Any ineffective portion of a financial instrument's change in fair
value is immediately recognized into earnings.
The Company determines the fair values of its derivatives based on quoted market prices or pricing models using current market rates. Refer to Note 16. The
notional amounts of the derivative financial instruments do not necessarily represent amounts exchanged by the parties and, therefore, are not a direct
measure of our exposure to the financial risks described above. The amounts exchanged are calculated by reference to the notional amounts and by other
terms of the derivatives, such as interest rates, foreign currency exchange rates, commodity rates or other financial indices. The Company does not view the
fair values of its derivatives in isolation but rather in relation to the fair values or cash flows of the underlying hedged transactions or other exposures.
Virtually all of our derivatives are straightforward over-the-counter instruments with liquid markets.
The following table presents the fair values of the Company's derivative instruments that were designated and qualified as part of a hedging relationship (in
millions):
Fair Value1,2
Derivatives Designated as Hedging Instruments Balance Sheet Location1


December 31,
2014
Assets:

Foreign currency contracts Prepaid expenses and other assets
 
$ 923
Foreign currency contracts Other assets

346
Commodity contracts Prepaid expenses and other assets

—
Interest rate contracts Prepaid expenses and other assets

14
Interest rate contracts Other assets

146
Total assets
 
$ 1,429
Liabilities:

Foreign currency contracts Accounts payable and accrued expenses
 
$ 24
Foreign currency contracts Other liabilities

249
Commodity contracts Accounts payable and accrued expenses

1
Interest rate contracts Accounts payable and accrued expenses

11
Interest rate contracts Other liabilities

35
Total liabilities
 
$ 320
1 All of the Company's derivative instruments are carried at fair value in our consolidated balance sheets after considering the impact of legally enforceable master netting
agreements and cash collateral held or placed with the same counterparties, as applicable. Current disclosure requirements mandate that derivatives must also be disclosed without
reflecting the impact of master netting agreements and cash collateral. Refer to Note 16 for the net presentation of the Company's derivative instruments.
2 Refer to Note 16 for additional information related to the estimated fair value.
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