Obtain The Coca-Cola Company's 2010 annual report either using the ''Investor Relations'' portion of its website (do
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1. What was the total amount of intangible assets that the company reported at the end of 2010, and what was the amount of each component?
2. Do you think that the company has additional intangible assets that are not recorded on the balance sheet? Why? How would this issue affect your understanding of the company's financial Performance?
3. Consider the intangible assets with a finite life. What amount of intangible assets were purchased during the year?
4. Compute the estimated average useful life of the intangible assets with a finite life.
5. Why does the company amortize some of its intangible assets but not others?
Intangible Assets
An intangible asset is a resource controlled by an entity without physical substance. Unlike other assets, an intangible asset has no physical existence and you cannot touch it.Types of Intangible Assets and ExamplesSome examples are patented...
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1 Intangible assets at the end of 2010 total 26909 million These consist of the following indefinitelived intangible assets 6356 million of trademarks 7511 million of bottlers franchise rights 11665 million of goodwill and 113 million of other intangible assets Definitelived intangible assets consist of 606 million of customer relationships 605 million of bottlers franchise rights 111 million of trademarks and 258 million of other intangible assets Accumulated amortization of the definitelived intangible assets is 316 million 2 The company has additional intangible assets that are not recorded on the balance sheet such as its name worldwide reputation and the secret formula for Coke This means that CocaColas assets are understated although under the historical cost framework assets such as the trade name and secret formula would probably be fully amortized and measures of performance such as return on assets are overstated There is also a potential effect on income since such assets would have to be amortized or tested for impairment at least annually They would only be systematically amortized if there was evidence that they had a limited life However amounts spent on enhancing the value of these assets in the current period are expensed under GAAP and so there might not be any material impact on income compared to capitalization and amortization 3 CocaCola acquired 380 million of customer relationships and 605 million of bottlers franchise rights that were subject to amortization This information is found in Note 2 4 Average useful life of intangible assets with a definite life Definitelived intangible assets gross Amortization expense 1580 million 102 million 155 years 5 Intangible assets are amortized if they have a finite life and are not amortized if they have an indefinite ...View the full answer
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Related Book For 
Intermediate Accounting Reporting and Analysis
ISBN: 978-1111822361
1st edition
Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach
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