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’ ...

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