Questions
Coca-Cola 2.1. Coca-Cola’s profile Coca-Cola started its business in 1886 as a local soda producer in...


Coca-Cola
2.1. Coca-Cola’s profile
Coca-Cola started its business in 1886 as a local soda producer in Atlanta, Georgia (US) selling about nine beverages per day. By the 1920s, the company had begun expanding internationally, selling its products first in the Caribbean and Canadian markets and then moving in consecutive decades to Asia, Europe, South America and the Soviet Union. By the end of the 20th century, the company was selling its products in almost every country in the world. In 2005 it became the largest manufacturer, distributor and marketer of non-alcoholic beverages and syrups in the world. Coca-Cola is a publicly-held company listed on the New York Stock Exchange (NYSE).
2.2. Coca-Cola’s CSR policies and reporting
In 2007 Coca-Cola launched its sustainability framework Live Positively embedded in the system at all levels, from production and packaging to distribution. The company’s CSR policy Live Positively establishes seven core areas where the company sets itself measurable goals to
improve the business’ sustainability practices. The core areas are beverage benefits, active healthy living, the community, energy and climate, sustainable packaging, water stewardship and the workplace.
Coca-Cola has a Code of Business Conduct which aims at providing guidelines to its employees on –amongst other things – competition issues and anti-corruption. The company has adopted international CSR guidelines such as Global Compact and Ruggie’s Protect, Respect and Remedy Framework (Ruggie’s Framework), but these guidelines do not seem to be integrated into the Code of Business. However, these CSR initiatives are included in other activities or policies of the company. For instance, the UN Global Compact principles are cross- referenced in the company’s annual Sustainability Reviews and Ruggie’s Framework is partly adopted in the company’s ‘Human Right Statement’. After the conflict in India, in 2007 Coca- Cola formed a partnership with the World Wildlife Fund (WWF)21 and became a member of the CEO Water Mandate, as water is one of the company’s main concerns.
Every year Coca-Cola publishes a directors’ report denominated ‘The Coca-Cola Company Annual Report’; the last one was published in March 2011 and comprises the company’s activities during 2010.22 In this report there is a small section dedicated to CSR and it includes a brief description of the initiatives in community development and water preservation that the company has developed. Since 2001, Coca-Cola also annually publishes a separate report devoted to CSR called ‘The Coca-Cola Company Sustainability Review’. These reviews, which are published every two years, are verified and assured by a third party, the sustainability rating firm FIRA Sustainability Ltd. This verification provides ‘moderate assurance’ on the reliability of the information reported by Coca-Cola. Both reports – the annual company review and the sustainability reports – are elaborated based on the GRI G3 guidelines, which were adopted by the company in 2001. Due to its relevance to Coca-Cola’s business, the company also annually reports on the progress of the water stewardship programme’s targets.
2.3. Coca-Cola’s conflicts
Several campaigns and demonstrations followed the publication of a report issued by the Indian NGO Centre for Science and Environment (CSE) in 2003. The report provided evidence of the presence of pesticides, to a level exceeding European standards, in a sample of a dozen Coca- Cola and PepsiCo beverages sold in India. With that evidence at hand, the CSE called on the Indian government to implement legally enforceable water standards. The report gained ample public and media attention, resulting in almost immediate effects on Coca-Cola revenues.
The main allegations made by the NGO against Coca-Cola were that it sold products containing unacceptable levels of pesticides, it extracted large amounts of groundwater and it had polluted water sources. These conflicts will be discussed under 2.3.1 and 2.3.2.
2.3.1. The presence of pesticides
Regarding the allegation about Coca-Cola beverages containing high levels of pesticide residues, the Indian government undertook various investigations. The government set up a Joint Committee to carry out its own tests on the beverages. The tests also found the presence of pesticides that failed to meet European standards, but they were still considered safe under local standards. Therefore, it was concluded that Coca-Cola had not violated any national laws. However, the Indian government acknowledged the need to adopt appropriate and enforceable standards for carbonated beverages.
In 2006, after almost three years of ongoing allegations, the CSE published its second test on Coca-Cola drinks, also resulting in a high content of pesticide residues (24 times higher than European Union standards, which were proposed by the Bureau of Indian Standards to be implemented in India as well). CSE published this test to prove that nothing had changed, alleging that the stricter standards for carbonated drinks and other beverages had either been

lost in committees or blocked by powerful interests in the government. Finally, in 2008 an independent study undertaken by The Energy and Resources Institute (TERI) ended the long- standing allegations by concluding that the water used in Coca-Cola in India is free of pesticides. However, because the institute did not test the final product, other ingredients could have contained pesticides.
2.3.2. Water pollution and the over-extraction of groundwater.
Coca-Cola was also accused of causing water shortages in – among other areas – the community of Plachimada in Kerala, southern India. In addition, Coca-Cola was accused of water pollution by discharging wastewater into fields and rivers surrounding Coca-Cola’s plants in the same community. Groundwater and soil were polluted to an extent that Indian public health authorities saw the need to post signs around wells and hand pumps advising the community that the water was unfit for human consumption.
In 2000, the company established its production operations in Plachimada. Local people claimed that they started experiencing water scarcity soon after the operations began. The state government initiated proceedings against Coca-Cola in 2003, and soon after that the High Court of Kerala prohibited Coca-Cola from over-extracting groundwater. By 2004 the company had suspended its production operations, while it attempted to renew its licence to operate. Coca- Cola argued that patterns of decreasing rainfall were the main cause of the draught conditions experienced in the area. After a long judicial procedure and ongoing demonstrations, the company succeeded in obtaining the licence renewal to resume its operations. In 2006 Coca- Cola’s successful re-establishment of operations was reversed when the government of Kerala banned the manufacture and sale of Coca-Cola products in Kerala on the ground that it was unsafe due to its high content of pesticides. However, the ban did not last for long and later that same year the High Court of India overturned Kerala’s Court decision. More recently, in March 2010, a state government panel recommended fining Coca-Cola’s Indian subsidiary a total of $47 million because of the damage caused to the water and soil in Kerala. Also, a special committee in charge of looking into claims by community members affected by the water pollution was set up.
The long legal procedures against the Indian government that Coca-Cola had to face were not the only consequence of the conflict. The brand suffered a great loss of consumer trust and reputational damage in India and abroad. In India there was an overall sales drop of 40% within two weeks after the release of the 2003 CSE report. The impact in annual sales was a decline of 15% in overall sales in 2003– in comparison to prior annual growth rates of 25-30%. This highly publicised conflict in India also caught the attention of consumers in the US. After a series of demonstrations by students who joined two activist groups in the US, ten American universities temporarily stopped selling Coca-Cola products at their campus facilities.
2.4. Coca-Cola’s CSR policies post-conflicts
Two years before the water conflict in India in 2003, Coca-Cola adopted the GRI Guidelines and started reporting on sustainability. By 2003, the company had already experienced a few CSR- related conflicts in other parts of the world. However, none of them had the grave consequence of a loss of trust in the company and its products by consumers and the public in general.
According to Pirson and Malhotra, the main reason why this controversy ended so badly for Coca-Cola lies in its response to the problem. Coca-Cola denied having produced beverages containing Elevated levels of pesticides, as well as having over-exploited and polluted water resources. By denying all claims and trying to prove its integrity, instead of demonstrating concern towards the situation, Coca-Cola failed to regain consumers’ trust. The Indian population viewed Coca-Cola as a corporate villain who cared more about profits than public

health. In comparison, previous conflicts experienced by the company in the US and Belgium were better handled because it included stakeholder engagement in its strategy.
It appears that the company became aware of its mistake after the controversy had been ongoing for a couple of years. In 2008 Jeff Seabright, Coca-Cola’s vice president of environment and water resources, recognized that the company had not adequately handled the controversy. He acknowledged that local communities’ perception of their operation matters, and that for the company ‘(...) having goodwill in the community is an important thing’.
Although Coca-Cola still denies most of the allegations, the reputational damage experienced after the controversy in India pushed Coca-Cola to take damage-control measures. Those measures at first consisted of statements to confirm Coca-Cola’s integrity. For example, Coca-Cola dedicated a page in the Corporate Responsibility Review of 2006 to address the controversy. The statement consisted mainly of providing information supporting its good practices and water management of its operations in India. But this statement did little to combat the declining sales and increasing losses exceeding investments. Coca-Cola gradually changed its strategy to include damage-control measures that addressed the Indian communities’ grievances. In 2008 the company published its first environmental performance report on operations in India, which covered activities from 2004 to 2007.53 It also created the Coca-Cola India Foundation, Anandana, which works with local communities and NGOs to address local water problems. But perhaps the most outstanding change of strategy by Coca-Cola consisted of launching various community water projects in India. An example is the rainwater harvesting project, where Coca-Cola’s operations partnered with the Central Ground Water Authority, the State Ground Water Boards, NGOs and communities to address water scarcity and depleting groundwater levels through rainwater harvesting techniques across 17 states in India. These techniques consist mainly of collecting and storing rainwater while preventing its evaporation and runoff for its efficient utilisation and conservation. The idea behind this is to capture large quantities of good quality water that could otherwise go to waste. By returning to the ecosystem the water used in its operations in India through water harvesting, the company expected that this project could eventually turn the company into a ‘net zero’ user of groundwater by 2009.55 In the 2012 Water Stewardship and Replenish Report, Coca-Cola stated that its operations in India have ‘achieved full balance between groundwater used in beverage production and that replenished to nature and communities – ahead of the global target’.
It appears that the controversy in India was a learning experience for the company, and that it motivated the company to adopt a more proactive CSR policy on a global scale that focuses on water management. In June 2007, Coca-Cola implemented a water stewardship programme and committed itself to reduce its operational water footprint and to offset the water used in the Company’s products through locally relevant projects. To achieve those commitments Coca-Cola established three measurable objectives:
(1) Reducing water use by improving water efficiency by 20% over 2004 levels by 2012. The latest data available from 2010 shows a 16% improvement over the 2004 baseline.
(2) Recycling water through wastewater treatment and returning all water used in manufacturing processes to the environment at a level that supports aquatic life and agriculture by the end of 2010. By September 2011, the progress observed concerning this target was 96%.59
(3) Replenishing water used by offsetting the litres of water used in finished beverages by 2020 through local projects that support communities and nature (i.e. watershed protection and rainwater harvesting). Currently, Coca-Cola reports that it holds a global portfolio of 386 community water partnerships or community-based replenish projects. By 2011, about 35% of the water used in finished beverages was replenished.
It is noteworthy that Coca-Cola publishes, in addition and separate to the sustainability reports, an annual water report. In these reports the company publishes assessments of and the

progress in its water initiatives. Some of the assessments are made by the Global Environment & Technology Foundation, an American NGO experienced in facilitating the creation of public- private partnerships.
Also, in 2007, Coca-Cola entered into a partnership with WWF. Its core objectives are increasing understanding on watersheds and water cycles to improve Coca-Cola’s water usage, working with local communities in various locations worldwide, and developing a common framework to preserve water sources. Finally, and also in the same year, the company became a member of the public-private initiative CEO Water Mandate, which is a public-private initiative that assists companies in the development, implementation and disclosure of water sustainability policies and practices.
ELEMENTS TO BE ADDRESSED
-Sustainability
-Accountability
-Transparency
QUESTIONS TO BE ANSWERED
-What are the principles od CSR involved in this case?
-What are the environmental issues and their effects and implications? -Should CSR be a voluntary Activity?
-What is the relation between CSR and profit?

In: Economics

8. A professor tests whether the loudness of noise during an exam (low, medium, and high)...

8. A professor tests whether the loudness of noise during an exam (low, medium, and high) is independent of exam grades (pass, fail). The following table shows the observed frequencies for this test.

Noise Level
Low Medium High
Exam Pass 21 17 9 47
Fail 9 6 12 27
30 23 21 N = 74

Part A) Conduct a chi-square test for independence at a 0.05 level of significance. (Round your answer to two decimal places.)

Decide whether to retain or reject the null hypothesis.

Part B) Compute effect size using Cramer's V. (Round your answer to two decimal places.)

9. What is Cramer's V for each of the following values for the chi-square test for independence? (Round your answers to two decimal places.)

Part A) X2 = 3.63, n = 50, dfsmaller = 1

Part B) X2 = 9.27, n = 120, dfsmaller = 2

Part C) X2 = 12.23, n = 160, dfsmaller = 3

In: Statistics and Probability

Exercise 1. The following information is available for company ABC as of 31December N: Land                   500...

Exercise 1. The following information is available for company ABC as of 31December N:

Land                   500
Additional paid in capital (share premium)         150
Advance payments to suppliers (from which for inventories 200)             300
Licenses             50
Customers         600
Prepayments     80
Legal reserve     70
Dividends payable          100
Depreciation of plant and machinery     50
Investments in associates                        700
Issued capital paid in (Share capital paid in)       ??
Sundry debtors               100
Raw materials                 60
Plant and machinery      700
Long term bank loans (of which becoming due in less than one year 150)        525
Write downs of raw materials                 5
Cash at bank     30
Provisions for guarantees to customers               500
VAT payable                   50
Long term receivables   100
Buildings                         300
Development costs (assets recognition criteria are fulfilled)             100
Other reserves                700
Salaries payable             200
Depreciation of buildings           50
Short term bank loans                150
Finished goods               180
Profit for the period       250
Advances received from customer          100
Short term financial investments            150
Suppliers payable           100
Bills of exchange payable            30
Other taxes payable      50
Deferred income (venituri amanate)      100

Required:
a. Draw up the balance sheet
b. Calculate issued capital (paid in capital).

Exercise 2. Using the following elements prepare an income statement by function and by nature (you must obtain the same result with both method.

  1. Personal expenses 650

a.1. for production 400

a.2. for distribution 150

a.3. for administration 100

  1. Interest expenses 40
  2. row material expenses 150
  3. income tax expenses 150
  4. merchandise expenses 10
  5. consumable expenses 300

f.1. for production 200

f.2. for distribution 70

f.3. for administration 30

  1. Finish goods revenues 1.400
  2. Other op expenses.210
  3. Financial expenses 46
  4. Other taxes expenses 20
  5. Finish goods -31.12.N 200
  6. Costs CSS 210:

l.1. for production 130

l.2. for distribution 50

l.3. for administration 30

  1. INTEREST REVENUE 60
  2. Services expenses 10
  3. other financial revenue 10
  4. seles revenue 50
  5. depreciation expenses 250

q.1. for production 180

q.2. for distribution 20

q.3.for administration 50

  1. revenue from dividends 120

In: Accounting

Assessing Revenue Recognition Timing and Income Measurement Discuss and justify when each of the following businesses...

Assessing Revenue Recognition Timing and Income Measurement Discuss and justify when each of the following businesses should recognize revenue and identify any income measurement issues that are likely to arise.

a. RealMoney.Com, a division of TheStreet.Com provides investment advice to customers for an up-front fee. It provides these customers with password-protected access to its website where customers can download certain investment reports. Real Money has an obligation to provide updates on its website.

b. Oracle Corporation develops general ledger and other business application software that it sells to its customers. The customer pays an up-front fee to gain the right to use the software and a monthly fee for support services.

c. Intuit Inc. develops tax preparation software that it sells to its customers for a flat fee. No further payment is required and the software cannot be returned, only exchanged if defective. d. A developer of computer games sells its software with a 10-day right of return period during which the software can be returned for a full refund. After the 10-day period has expired, the software cannot be returned.

In: Accounting

Case 19-1 The Terminator Trans Ocean Shipping (“Trans Ocean”) provides domestic and international transportation and logistics...

Case 19-1 The Terminator Trans Ocean Shipping (“Trans Ocean”) provides domestic and international transportation and logistics services to customers. The company contracts shipping vessels, trucks, and aircraft to provide regional, long-haul, and international shipments of customer goods. Trans Ocean has entered into the following contracts: In March 2019, Trans Ocean entered into a revenue contract with a customer, Asia Manufacturing (“Asia”), in which Trans Ocean would be the exclusive shipper of Asia’s products between Shanghai and Los Angeles. Trans Ocean’s contract with Asia is effective on July 1, 2019. Before signing the contract with Asia, Trans Ocean did not operate the ShanghaiLos Angeles route, and to satisfy the contract with Asia, in April 2019, Trans Ocean leases a cargo ship from Heavy Vessel Manufacturing (“Heavy”), which commences on July 1, 2019. Because the shipping route is new, on July 1, 2019,

(1) Trans Ocean has no other customers to deliver goods on the Shanghai-Los Angeles route and (2) because of operational costs, Trans Ocean does not have alternative uses for the leased cargo ship. Trans Ocean adopted ASC 842, Leases, on January 1, 2019. The following are relevant facts about Trans Ocean’s revenue contract with Asia, and Trans Ocean’s lease with Heavy. Trans Ocean’s Revenue Contract With Asia • The revenue contract’s stated term with Asia is for one year. • Asia can renew the contract annually for up to four additional years. Therefore, the revenue contract can extend to five full years. • Asia pays a significant up-front nonrefundable fee for the initial one-year term; the same amount is due at the beginning of every renewal period. • Asia can cancel at any time without incurring a penalty outside of forfeiting any up-front nonrefundable fees already paid or owed at the beginning of the initial contract term and any and each renewed period. • Although the contract is new, Trans Ocean and Asia have entered into similar arrangements with similar terms and historically, Asia has renewed for one or more years. • Trans Ocean appropriately concludes that (1) the revenue contract meets the scope of, and criteria in, ASC 606, Revenue From Contracts With Customers, and (2) the contract term for its revenue contract with Asia is one year. Trans Ocean’s Lease With Heavy • The contract between Trans Ocean and Heavy contains a lease under ASC 842. • Rental payments are at market and fixed each year. Case 19-1: The Terminator Page 2 Copyright © 2019 Deloitte Development LLC All Rights Reserved. • To mitigate risks, Trans Ocean negotiated the lease period and renewal options to mirror those of Trans Ocean’s revenue contract with Asia. As a result, the fixed, noncancelable term of the lease is one year, and Trans Ocean can renew annually for four additional years (i.e., up to five full years). Trans Ocean believes that since Asia can terminate the revenue contract after one year (even though Asia may need to ship products for longer than a year and has historically renewed under other similarly structured contracts), it is uncertain whether Asia will renew the revenue contract. Because of this uncertainty, Trans Ocean believes that the renewal options related to the lease are not reasonably certain at the commencement date of the lease. As a result, Trans Ocean concludes that the lease term for its lease contract with Heavy is also one year. Required:

2. What factors should Trans Ocean consider in supporting its conclusion related to the lease term? Additional Facts On December 1, 2019, Trans Ocean entered into a shipping contract with Eastern Manufacturing Company (“Eastern”) to ship Eastern’s products between Shanghai and Los Angeles. The contract with Eastern commences on January 1, 2020, and on the basis of Trans Ocean’s evaluation of its enforceable rights and obligations in the contract with Eastern, Trans Ocean concludes that term of the revenue contract with Eastern is for a period of two years. Further, Trans Ocean concludes that (1) because of its contract with Asia and Eastern, it would not be operationally feasible to deploy the leased cargo vessel on other routes; (2) the cargo vessel will have sufficient capacity to service both Asia and Eastern; and (3) the leased asset is needed for Trans Ocean to perform under its revenue contract with Eastern (because of economic reasons that would not allow Trans Ocean to use another vessel). Required: 3. Should Trans Ocean reassess the lease term of the cargo vessel? If so, why?

In: Operations Management

The following table gives the weights, to the nearest kilogram, of randomly-selected male university students. 69...

The following table gives the weights, to the nearest kilogram, of randomly-selected male university students. 69 82 75 66 72 63 74 78 73 79 70 74 68 74 76 72 84 63 69 78 81 60 77 83 73 86 71 68 76 70 68 80 73 67 71 75 78 73 64 73 a. Using class intervals of size 5kg, construct a frequency distribution of the above data. b. Using the grouped data, calculate the following quantities: iv. Quartile number 1 v. Quartile number 3 vi. Variance vii. Standard Deviation (1 mark)

In: Statistics and Probability

Consider the following table: Year Quantity of Money (billions of $) Velocity Real GDP (billions of...

Consider the following table:



Year

Quantity of Money (billions of $)

Velocity

Real GDP (billions of 2009 $)

GDP Deflator


2006

$1,369

10.274

$14,717


2009

$1,684

8.650
1.002


2012

$2,434

6.696

$15,384

Fill in the missing data, using the quantity equation of money.

Why might velocity change in this way?

Calculate the average inflation rate between 2006 and 2009 and between 2009 and 2012.

If velocity had remained at the 2006 level, what would the deflator have been in 2009 and 2012, assuming real GDP and money are as in the table?

In: Economics

Exercise 5-14 Effect of credit card sales on financial statements LO 5-5 Ultra Day Spa provided...

Exercise 5-14 Effect of credit card sales on financial statements LO 5-5

Ultra Day Spa provided $85,050 of services during 2018. All customers paid for the services with credit cards. Ultra submitted the credit card receipts to the credit card company immediately. The credit card company paid Ultra cash in the amount of face value less a 4 percent service charge.


Required

  1. Record the credit card sales and the subsequent collection of accounts receivable in a horizontal statements model like the one shown here. In the Cash Flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). If an element is not affected by the event, leave the cell blank.
  2. Based on this information alone, answer the following questions:
  1. (1) What is the amount of total assets at the end of the accounting period?
  2. (2) What is the amount of revenue reported on the income statement?
  3. (3) What is the amount of cash flow from operating activities reported on the statement of cash flows?

In: Accounting

Trial Balance Transactions Required: 5 Assets, 2 Liabilities, 2 Equity, 1 Revenue, and 5 Expense accounts...

Trial Balance Transactions Required: 5 Assets, 2 Liabilities, 2 Equity, 1 Revenue, and 5 Expense accounts Jan 1 Owner invested $10,000 and recorded ownership in the company 2 Company paid current month's rent $500 7 Purchased merchandise to sell to customers on account from vendor TicWick Products $3,000 8 Sold to customer Mary Jones merchandise on account $1,600; cost of merchandise was $1,000 10 Signed a contract with a new supplier 15 Paid advertising from checking $100 17 Purchased a new computer from checking $250 20 Mary Jones paid her account balance in full. Amount deposited to checking account. 22 Paid legal fees $200 23 Purchased store equipment on account from Ace Supply $1,000. 25 Paid utilities $140 28 Paid 3 months of insurance $300 for coverage beginning Feb 1. 31 Paid Ace Supply for amount owed

In: Accounting

The company rents vehicle and has contracts with customers that run from Sep to June. Customers...

The company rents vehicle and has contracts with customers that run from Sep to June.

Customers pay the yearly fee in advance for the rentals. In September 2001, the company received $70,000 cash and recorded it as rental income.

What is Dec 31,2001 year-end adjusting entries for this transaction under IFRS.

In: Accounting