133725425 The Coca- Cola Company's SEC 10k

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1 The Coca-Cola Company’s SEC 10K Student’s Name Institution Course Professor Date

2 The Coca-Cola Company’s SEC 10K Question 1 The main companies that Coca-Cola considers significant equity method investments are CCEP, Monster Beverage Corporation (“Monster”), AC Bebidas, Coca-Cola FEMSA, Coca-Cola HBC AG (“Coca-Cola Hellenic”), and Coca-Cola Bottlers Japan Holdings Inc. (“CCBJHI”) (The Coca-Cola Company, 2019). Most of these investments are bottlers who help Coca-Cola distribute its products. Others are individual firms whose operations generate income for the company. Question 2 The main criteria employed by the Coca-Cola company is having a 15-30% ownership in the equity method investments. The 15-30% ownership ensures that the company has a big influence on the operations of these investments and some control over their policies (The Coca-Cola Company, 2019). Therefore, it can achieve its business and financial goals by influencing how the subsidiaries are run. Question 3 Coca-Cola describes its application of the equity method by including the company’s proportionate share of net income (loss) from equity investments into its consolidated net income. Additionally, the firm reports its share of net income. This leads to an increase in the carrying value of the equity method investments and the equity income net of consolidated income. Question 4 Coca-Cola reported an equity income of $1.008 billion for the year ending on Dec 31, 2018. The recorded equity income was a reduction from the 1.071 reported in 2017 (The Coca-

3 Cola Company, 2019). In this case, the company experiences a $63 million reduction in the equity income. Question 5 Equity method investment Carrying Amounts (millions $) Fair Value (millions $) CCEP 3,551 4,033 Monster Beverage Corporation 3,573 5,026 Coca-Cola FEMSA 1,714 3,401 Coca-Cola HBC AG 1,260 2,681 Coca-Cola Bottlers Japan Holdings Inc. (“CCBJHI”) 1,142 978 The two values are primarily important during valuation. They help one determine an over or undervaluation. For instance, in a case where there is an excess payment that has been allocated to an asset, then the amount is assigned to goodwill. The result is an adjustment in the EMI’s income account, allowing Coca-Cola to easily determine the carrying amount for each investee.

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4 Reference The Coca-Cola Company. (2019). ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2018. https://investors.coca-colacompany.com/filings-reports/annual-filings-10- k/content/0000021344-19-000014/a2018123110-k.htm? TB_iframe=true&height=auto&width=auto&preload=false