Share
Explore BrainMass

Pepsico, Coca-Cola, and Proctor and Gamble

Part 1
1. Access the latest year's annual report on form 10-K of Pepsico, The Coca-Cola Company, and The Proctor and Gamble Company, three publicly traded companies.
2. Identify two financial accounting standard notations. For each company: Who are the primary parties involved in the disclosure of the financial statements to the public? What is the role of each of the primary parties?
3. Review the principle financial statements of each organization. What are the objectives of financial reporting? What are the two components of the Balance Sheet and two components of the Statement of Earnings of each of the organizations that fulfills one or more of the objectives?

Part 2
1. Identify in the Financial Statements and Notes to the Financial Statements, the components of Cash and Cash Equivalents, Accounts Receivable, Inventory, and Property, Plant and Equipment.
2. What are the measurements used to recognize the amounts recorded in the Balance Sheet for Cash and Cash Equivalents, Accounts Receivable, Inventory, and Property, Plant and Equipment of each of the organizations?

Part 3
1. Identify in the Financial Statements and Notes to the Financial Statements, the components of Intangible Assets and Leases.
2. What are the measurements used to recognize the amounts recorded in the Balance Sheet for Intangible Assets and Leases of each of the organizations?

Part 4
1. Identify in the Financial Statements and Notes to the Financial Statements, the components of current and Long-term Liabilities.
2. What are the measurements used to recognize the amounts recorded in the Balance Sheet for current and Long-term Liabilities of each of the organizations?

Part 5
1. Using the annual reports of the organizations chosen in part 1, locate the Financial Statements and Notes to the Financial Statements.
2. Identify in the Financial Statements and Notes to the Financial Statements, the components of Stockholder's Equity.
3. Discuss the measurements used to recognize the amounts recorded in the Balance Sheet for Stockholder's Equity of each of the organizations.

Solution Preview

Part I:
The two financial accounting standard notations are:
- SFAS 47: Disclosure of long term obligations
- SFAS 87: Employers' Accounting for Pensions

The primary parties involved in the disclosure of financial statement to the public are:
(i) Executive Management
(ii) The external auditor
(iii) The internal auditor

Role of each of the primary parties:
(i) Executive Management: The executive management owns and manages the control environment and financial information that includes notes associated with the financial statement and the disclosers of financial report.
(ii) The external auditor: The role of external auditor is to assure the end users of the financial report that the information reported in the report fairly represents the financial condition and result of operations of the organization and it is in accordance with generally accepted accounting principles.
(iii) The internal auditor: The role of internal auditor is to perform the procedures to assure senior management and the audit and other committee of the governing body that the controls surrounding the processes and the development of financial report are effective.

The objectives of financial reporting are:
(i) The primary objective of the financial reporting is to provide information that is useful to present and potential investors and creditors and other users in making informed and rational investment, credit, and similar decisions.
(ii) Financial reporting should reflect prospective cash receipts to investors and creditors
(iii) Financial reporting should reflect prospective cash flow to the company.
(iv) Financial reporting should provide information about the company's resources and claims to its resources.

The two components of balance sheet are accounts receivables and long term debt and the two components of statement of earnings are EBIT and interest paid.

Part II:
Measurements used to recognize the amounts recorded in the Balance Sheet for Cash and Cash Equivalents, Accounts Receivable, Inventory, and Property, Plant and Equipment of each of the organizations are:

PepsiCo:
Cash and Cash Equivalent: the cash equivalents are highly liquid with original maturities of three months or less.

Accounts Receivable: It includes the trade receivables and the other receivables less of the allowances. These allowances are the net amount charged to expense, deductions (includes accounts written off) and other (Includes adjustments related to acquisitions, currency translation and other adjustments).

Inventory: Approximately 3%, in both 2012 and 2011, of the inventory cost was computed using the LIFO method. The differences between LIFO and FIFO methods of valuing these inventories were not material. The inventory includes raw material, work-in progress and finished goods.

Property, Plant and Equipment: Property, plant and equipment is recorded at historical cost. Depreciation and amortization are recognized on a straight-line basis over an asset's estimated useful life. Land is not depreciated and construction in progress is not depreciated until ready for service.

Coca-Cola Company:
Cash and Cash Equivalents: Cash equivalents include the time deposits and other investments that are highly liquid and have maturities of ...

Solution Summary

The expert examines Pepsico, Coca-Cola and Proctor and Gamble.

$2.19