Corporate Financial Reporting and Analysis, 3rd Edition

Chapter 16

Accounting for Shareholders’ Equity

Introduction

This chapter examines the financial reporting consequences of the most common transactions and events that impact shareholders’ equity, including:

• the issuance of common and preferred shares
• the declaration and payment of cash dividends
• share repurchases
• stock dividends and stock splits
• convertible securities.

Relevant concepts and practices will be illustrated using the balance sheets and statements of shareholders’ equity for The Coca-Cola Company (see Exhibits 16.1 and 16.2). Unless otherwise noted, the following discussion applies equally to financial statements prepared under US GAAP or IFRS.

Exhibit 16.1 The Coca-Cola Company and subsidiaries consolidated balance sheets

December 31,(in millions except par value)	2009	2008
ASSETS
CURRENT ASSETS
Cash, cash equivalents and short-term investments	$9,151	$4,701
Marketable securities	62	278
Trade accounts receivable, less allowances of $55 and $51, respectively	3,758	3,090
Inventories	2,354	2,187
Prepaid expenses and other assets	2,226	1,920
TOTAL CURRENT ASSETS	17,551	12,176
INVESTMENTS
Equity method investments	6,217	5,316
Other investments, principally bottling companies	538	463
OTHER ASSETS	1,976	1,733
PROPERTY, PLANT AND EQUIPMENT – NET	9,561	8,326
TRADEMARKS WITH INDEFINITE LIVES	6,183	6,059
GOODWILL	4,224	4,029
OTHER INTANGIBLE ASSETS	2,421	2,417
TOTAL ASSETS	$48,671	$40,519
LIABILITIES AND SHAREOWNERS’ ...