Coca Cola 2015 Annual Report Download - page 87

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 $1,735
million, $1,716 million and $1,727 million in 2015, 2014 and 2013, respectively. Amortization expense for leasehold improvements totaled $18 million,
$20 million and $16 million in 2015, 2014 and 2013, 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 2015, the Company performed qualitative assessments on 25 percent of our indefinite-lived intangible assets balance.
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