The annual reports for The Coca-Cola Company and PepsiCo, Inc. are available on their respective websites at http://www.coca-colacompany.com/investors/investors-info-reports-and-financial-informationand http://www.pepsico.com/Investors/Annual-Reports-and-Proxy-Information.
Refer to the most recent annual reports to find these companies’ financial statements and the accompanying notes to answer the following questions:
- What are the primary lines of business of these two companies as shown in the notes to the financial statements?
- Which company has the dominant position in beverage sales?
- How are inventories for these two companies valued? What methods are used to report inventory? How does their accounting for inventories affect comparability between the two companies?
- How are advertising costs accounted for? Where are deferred advertising costs reported in the financial statements? Using the element definition from the conceptual framework, should these deferred advertising costs be recorded as assets in the balance sheets? Why or why not? If so, what measurement attribute should be used in reporting the asset?