Question

In: Accounting

View the 2015 Annual Reports for the Coca-Cola Company and PepsiCo, Inc. (Download the PDFs of...

View the 2015 Annual Reports for the Coca-Cola Company and PepsiCo, Inc. (Download the PDFs of the Annual Form 10-K reports). Using these reports, answer the following questions:

What amounts for intangible assets did Coca-Cola and PepsiCo report in their respective balance sheets? What percentage of total assets is each of these reported amounts?

On what basis and over what periods of time did Coca-Cola and PepsiCo amortize their intangible assets?

What were Coca-Cola’s and PepsiCo’s net revenues (sales) for the year 2015? Which company increased its revenues more (dollars and percentage) from 2014 to 2015?

Are the revenue recognition policies of Coca-Cola and PepsiCo similar? Explain.

Solutions

Expert Solution

Intangible assets (In millions) for Coco Cola: $24,132 and for Pepsi Co: $25,988.

% Value of Intangible assets in Total Assets:

for Coca Cola: 27%

for Pepsi Co: 37%

Intangible assets are classified into one of three categories: (1) intangible assets with definite lives subject to amortization, (2) intangible assets with indefinite lives not subject to amortization and (3) goodwill. For intangible assets with definite lives, tests for impairment must be performed if conditions exist that indicate the carrying value may not be recoverable. For intangible assets with indefinite lives and goodwill, tests for impairment must be performed at least annually or more frequently if events or circumstances indicate that assets might be impaired

Sale Revenue: In Millions

Coca Cola: $44,294

Pepsi Co: $ 63,056

decline in net revenue comes to lower for Coca Cola Co. in 2015 as comparison to 2014.

Coca Cola recognizes revenue when title to products is transferred to bottling partners, resellers or other customers. Title usually transfers upon shipment to or receipt at our customers’ locations, as determined by the specific sales terms of each transaction and Pepsi Co recognizes revenue upon shipment or delivery to our customers based on written sales terms that do not allow for a right of return, hence revenue recognition policy of both the company are similiar.


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