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    Coca Cola Company and PepsiCo

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    The Coca Cola Company and PepsiCo, Inc.

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    A) Identify the changes in accounting principles reported by Coca Cola during the 3 years covered by its income statements (2002-2004). Describe the nature of the change and the year of change.
    B) Identify the changes in accounting principles reported by PepsiCo during the 3 years covered by its income statements (2002-2004). Describe the nature of the change and the year of change.
    C) For each change in accounting principle by Coca Cola and PepsiCo, identify, if possible, the cumulative effect of each change on prior years and the effect on operating results in the year of change.

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    (a) and (c) for Coca-Cola Company:

    Effective January 1, 2002, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended by SFAS No. 137 and SFAS No. 138. Consolidated Financial Statements were prepared in accordance with the provisions of SFAS No. 133. Prior years' financial statements have not been restated. The cumulative effect of these transition adjustments was an after-tax reduction to net income of approximately $10 million.

    Effective January 1, 2002, the Company adopted the provisions of Emerging Issues Task Force (EITF) Issue No. 00-14, "Accounting for Certain Sales Incentives," and EITF Issue No. 00-22, "Accounting for 'Points' and Certain Other Time-Based or Volume-Based Sales Incentive Offers, and Offers for Free Products ...

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