Coca Cola 2015 Annual Report Download - page 86

Each reporting period we review all of our investments in equity and debt securities, except for those classified as trading, 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 our cost basis in the investment. We also perform this evaluation every reporting period for each investment for which our
cost basis exceeded the fair value. The fair values of most of our 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 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 flow or estimates of sales proceeds valuation methodologies.
In the event the fair value of an investment declines below our cost basis, management is required to determine if the decline in fair value is other than
temporary. If management determines the decline is other than temporary, an impairment charge is recorded. Management's assessment as to the nature of a
decline in fair value is based on, among other things, the length of time and the extent to which the market value has been less than our cost basis; the
financial condition and near-term prospects of the issuer; and our intent and ability to retain the investment for a period of time sufficient to allow for any
anticipated recovery in market value.
Trade Accounts Receivable
We record trade accounts receivable at net realizable value. This value includes an appropriate allowance for estimated uncollectible accounts to reflect any
loss anticipated on the trade accounts receivable balances and charged to the provision for doubtful accounts. We calculate this allowance based on our
history of write-offs, the level of past-due accounts based on the contractual terms of the receivables, and our relationships with, and the economic status of,
our bottling partners and customers. We believe our exposure to concentrations of credit risk is limited due to the diverse geographic areas covered by our
operations. Activity in the allowance for doubtful accounts was as follows (in millions):
Year Ended December 31, 
2014
2013
Balance at beginning of year  
$ 61
$ 53
Net charges to costs and expenses1
308
30
Write-offs 
(13)
(14)
Other2

(25)
(8)
Balance at end of year  
$ 331
$ 61
1 The increase in 2014 was primarily related to concentrate sales receivables from our bottling partner in Venezuela. See Hyperinflationary Economies discussion below for
additional information.
2 Other includes foreign currency translation and the impact of transferring certain assets to assets held for sale. See Note 2.
A significant portion of our net operating revenues and corresponding accounts receivable is derived from sales of our products in international markets.
Refer to Note 19. We also generate a significant portion of our net operating revenues by selling concentrates and syrups to bottlers in which we have a
noncontrolling interest, including Coca-Cola FEMSA, S.A.B. de C.V. ("Coca-Cola FEMSA"), Coca-Cola HBC AG ("Coca-Cola Hellenic"), and Coca-Cola
İçecek A.Ş. ("Coca-Cola İçecek"). Refer to Note 6.
Inventories
Inventories consist primarily of raw materials and packaging (which includes ingredients and supplies) and finished goods (which include concentrates and
syrups in our concentrate operations and finished beverages in our finished product operations). Inventories are valued at the lower of cost or market. We
determine cost on the basis of the average cost or first-in, first-out methods. Refer to Note 4.
Derivative Instruments
Our Company, when deemed appropriate, uses derivatives as a risk management tool to mitigate the potential impact of certain market risks. The primary
market risks managed by the Company through the use of derivative instruments are foreign currency exchange rate risk, commodity price risk and interest
rate risk. All derivatives are carried at fair value in our consolidated balance sheets in the following line items, as applicable: prepaid expenses and other
assets; other assets; accounts payable and accrued expenses; and other liabilities. The cash flow impact of the Company's derivative instruments is primarily
included in our consolidated statements of cash flows in net cash provided by operating activities. Refer to Note 5.
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