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Anonymous
timer Asked: Oct 22nd, 2018
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(a) What are the amounts of Coca-Cola’s and PepsiCo’s provision for income taxes for the year 2014? Of each company’s 2014 provision for income taxes, what portion is current expense and what portion is deferred expense?

(b) What amount of cash was paid in 2014 for income taxes by Coca-Cola and by PepsiCo?

(c) What was the U.S. federal statutory tax rate in 2014? What was the effective tax rate in 2014 for Coca-Cola and PepsiCo? Why might their effective tax rates differ?

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C Specimen Financial Statements: The CocaCola Company The Coca-Cola Company is the world's largest beverage company. It owns or licenses and markets more than 500 nonalcoholic beverage brands, primarily sparkling beverages, but also a variety of still beverages such as waters, enhanced waters, juices and juice drinks, ready-to-drink teas and coffees, and energy and sports drinks. Finished beverage products bearing Coca-Cola trademarks, sold in the United States since 1886, are now available in more than 200 countries. To access Coca-Cola's complete annual report, including notes to the financial statements, follow these steps: 1. Go to http://www.coca-colacompany.com/investors/. 2. Select Financial Reports and Information and then click on 2014 Annual Report on Form 10-K. 3. The Notes to Consolidated Financial Statements begin on page 78. THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME Year Ended December 31, 2014 2013 2012 (In millions except per share data) $ $ $ NET OPERATING REVENUES 45,998 46,854 48,017 Cost of goods sold 17,889 18,421 19,053 GROSS PROFIT 28,109 28,433 28,964 Selling, general and administrative expenses 17,218 17,310 17,738 Other operating charges 1,183 895 447 OPERATING INCOME 9,708 10,228 10,779 Interest income 594 534 471 Interest expense 483 463 397 Equity income (loss) — net 769 602 819 Other income (loss) — net (1,263) 576 137 INCOME BEFORE INCOME TAXES 9,325 11,477 11,809 Income taxes 2,201 2,851 2,723 CONSOLIDATED NET INCOME 7,124 8,626 9,086 Less: Net income attributable to noncontrolling interests 26 42 67 NET INCOME ATTRIBUTABLE TO SHAREOWNERS OF $ $ $ THE COCA-COLA COMPANY 7,098 8,584 9,019 THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME $ $ $ BASIC NET INCOME PER SHARE1 1.62 1.94 2.00 $ $ $ DILUTED NET INCOME PER SHARE1 1.60 1.90 1.97 AVERAGE SHARES OUTSTANDING 4,387 4,434 4,504 Effect of dilutive securities 63 75 80 AVERAGE SHARES OUTSTANDING ASSUMING 4,450 4,509 4,584 DILUTION 1 Calculated based on net income attributable to shareowners of The Coca-Cola Company. THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Year Ended December 31, 2014 2013 2012 (In millions) $ $ $ CONSOLIDATED NET INCOME 7,124 8,626 9,086 Other comprehensive income: Net foreign currency translation adjustment (2,382) (1,187) (182) Net gain (loss) on derivatives 357 151 99 Net unrealized gain (loss) on available-for-sale securities 714 (80) 178 Net change in pension and other benefit liabilities (1,039) 1,066 (668) TOTAL COMPREHENSIVE INCOME 4,774 8,576 8,513 Less: Comprehensive income (loss) attributable to noncontrolling 21 39 105 interests TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO $ $ $ SHAREOWNERS OF THE COCA-COLA COMPANY 4,753 8,537 8,408 THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, 2014 2013 (In millions except par value) ASSETS CURRENT ASSETS $ $ Cash and cash equivalents 8,958 10,414 Short-term investments 9,052 6,707 TOTAL CASH, CASH EQUIVALENTS AND SHORT-TERM 18,010 17,121 INVESTMENTS THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS Marketable securities 3,665 3,147 Trade accounts receivable, less allowances of $331 and $61, respectively 4,466 4,873 Inventories 3,100 3,277 Prepaid expenses and other assets 3,066 2,886 Assets held for sale 679 — TOTAL CURRENT ASSETS 32,986 31,304 EQUITY METHOD INVESTMENTS 9,947 10,393 OTHER INVESTMENTS 3,678 1,119 OTHER ASSETS 4,407 4,661 PROPERTY, PLANT AND EQUIPMENT — net 14,633 14,967 TRADEMARKS WITH INDEFINITE LIVES 6,533 6,744 BOTTLERS' FRANCHISE RIGHTS WITH INDEFINITE LIVES 6,689 7,415 GOODWILL 12,100 12,312 OTHER INTANGIBLE ASSETS 1,050 1,140 $ $ TOTAL ASSETS 92,023 90,055 LIABILITIES AND EQUITY CURRENT LIABILITIES $ $ Accounts payable and accrued expenses 9,234 9,577 Loans and notes payable 19,130 16,901 Current maturities of long-term debt 3,552 1,024 Accrued income taxes 400 309 Liabilities held for sale 58 — TOTAL CURRENT LIABILITIES 32,374 27,811 LONG-TERM DEBT 19,063 19,154 OTHER LIABILITIES 4,389 3,498 DEFERRED INCOME TAXES 5,636 6,152 THE COCA-COLA COMPANY SHAREOWNERS' EQUITY Common stock, $0.25 par value; Authorized — 11,200 shares; Issued — 7,040 and 7,040 shares, respectively 1,760 1,760 Capital surplus 13,154 12,276 Reinvested earnings 63,408 61,660 Accumulated other comprehensive income (loss) (5,777) (3,432) Treasury stock, at cost — 2,674 and 2,638 shares, respectively (42,225) (39,091) EQUITY ATTRIBUTABLE TO SHAREOWNERS OF THE COCA30,320 33,173 COLA COMPANY THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS EQUITY ATTRIBUTABLE TO NONCONTROLLING INTERESTS 241 267 TOTAL EQUITY 30,561 33,440 $ $ TOTAL LIABILITIES AND EQUITY 92,023 90,055 THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, 2014 2013 2012 (In millions) OPERATING ACTIVITIES $ $ $ Consolidated net income 7,124 8,626 9,086 Depreciation and amortization 1,976 1,977 1,982 Stock-based compensation expense 209 227 259 Deferred income taxes (40) 648 632 Equity (income) loss — net of dividends (371) (201) (426) Foreign currency adjustments 415 168 (130) Significant (gains) losses on sales of assets — net 831 (670) (98) Other operating charges 761 465 166 Other items 149 234 254 Net change in operating assets and liabilities (439) (932) (1,080) Net cash provided by operating activities 10,615 10,542 10,645 INVESTING ACTIVITIES Purchases of investments (17,800) (14,782) (14,824) Proceeds from disposals of investments 12,986 12,791 7,791 Acquisitions of businesses, equity method investments and (389) (353) (1,486) nonmarketable securities Proceeds from disposals of businesses, equity method investments 148 872 20 and nonmarketable securities Purchases of property, plant and equipment (2,406) (2,550) (2,780) Proceeds from disposals of property, plant and equipment 223 111 143 Other investing activities (268) (303) (268) Net cash provided by (used in) investing activities (7,506) (4,214) (11,404) FINANCING ACTIVITIES Issuances of debt 41,674 43,425 42,791 Payments of debt (36,962) (38,714) (38,573) Issuances of stock 1,532 1,328 1,489 Purchases of stock for treasury (4,162) (4,832) (4,559) THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Dividends (5,350) (4,969) (4,595) Other financing activities (363) 17 100 Net cash provided by (used in) financing activities (3,631) (3,745) (3,347) EFFECT OF EXCHANGE RATE CHANGES ON CASH (934) (611) (255) AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS Net increase (decrease) during the year (1,456) 1,972 (4,361) Balance at beginning of year 10,414 8,442 12,803 $ $ $ Balance at end of year 8,958 10,414 8,442 THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREOWNERS' EQUITY Year Ended December 31, 2014 2013 2012 (In millions except per share data) EQUITY ATTRIBUTABLE TO SHAREOWNERS OF THE COCA-COLA COMPANY NUMBER OF COMMON SHARES OUTSTANDING Balance at beginning of year 4,402 4,469 4,526 Purchases of treasury stock (98) (121) (121) Treasury stock issued to employees related to stock 62 54 64 compensation plans Balance at end of year 4,366 4,402 4,469 $ $ $ COMMON STOCK 1,760 1,760 1,760 CAPITAL SURPLUS Balance at beginning of year 12,276 11,379 10,332 Stock issued to employees related to stock compensation plans 526 569 640 Tax benefit (charge) from stock compensation plans 169 144 144 Stock-based compensation 209 227 259 Other activities (26) (43) 4 Balance at end of year 13,154 12,276 11,379 REINVESTED EARNINGS Balance at beginning of year 61,660 58,045 53,621 Net income attributable to shareowners of The Coca-Cola 7,098 8,584 9,019 Company Dividends (per share — $1.22, $1.12 and $1.02 in 2014, 2013 (5,350) (4,969) (4,595) and 2012, respectively) Balance at end of year 63,408 61,660 58,045 THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREOWNERS' EQUITY ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Balance at beginning of year (3,432) (3,385) (2,774) Net other comprehensive income (loss) (2,345) (47) (611) Balance at end of year (5,777) (3,432) (3,385) TREASURY STOCK Balance at beginning of year (39,091) (35,009) (31,304) Stock issued to employees related to stock compensation plans 891 745 786 Purchases of treasury stock (4,025) (4,827) (4,491) Balance at end of year (42,225) (39,091) (35,009) TOTAL EQUITY ATTRIBUTABLE TO SHAREOWNERS $ $ $ OF THE COCA-COLA COMPANY 30,320 33,173 32,790 EQUITY ATTRIBUTABLE TO NONCONTROLLING INTERESTS $ Balance at beginning of year $ 378 $ 286 267 Net income attributable to noncontrolling interests 26 42 67 Net foreign currency translation adjustment (5) (3) 38 Dividends paid to noncontrolling interests (25) (58) (48) Acquisition of interests held by noncontrolling owners — (34) (15) Contributions by noncontrolling interests — 6 — Business combinations (22) 25 50 Deconsolidation of certain entities — (89) — TOTAL EQUITY ATTRIBUTABLE TO $ 241 $ 267 $ 378 NONCONTROLLING INTERESTS D Specimen Financial Statements: PepsiCo, Inc. Pepsico, Inc. is a leading global food and beverage company with a complementary portfolio of enjoyable brands, including Frito-Lay, Gatorade, Pepsi-Cola, Quaker, and Tropicana. Through its operations, authorized bottlers, contract manufacturers, and other third parties, PepsiCo makes, markets, distributes, and sells a wide variety of convenient and enjoyable beverages, foods, and snacks, serving customers and consumers in more than 200 countries and territories. To access PepsiCo's complete annual report, including notes to the financial statements, follow these steps: 1. Go to http://www.pepsico.com/Investors. 2. Select SEC Filings and then the 10K, dated 2/12/2015 (select the pdf version). 3. Select Entire document. 4. The Notes to Consolidated Financial Statements begin on page 73. 1. Consolidated Statement of Income 2. PepsiCo, Inc. and Subsidiaries 3. Fiscal years ended December 27, 2014, December 28, 2013 and December 29, 2012 4. (in millions except per share amounts 1. Consolidated Statement of Comprehensive Income 2. PepsiCo, Inc. and Subsidiaries 3. Fiscal years ended December 27, 2014, December 28, 2013 and December 29, 2012 4. (in millions) 1. Consolidated Statement of Cash Flows 2. PepsiCo, Inc. and Subsidiaries 3. Fiscal years ended December 27, 2014, December 28, 2013 and December 29, 2012 4. (in millions) 1. Consolidated Balance Sheet 2. PepsiCo, Inc. and Subsidiaries 3. December 27, 2014 and December 28, 2013 4. (in millions except per share amounts) 1. Consolidated Statement of Equity 2. PepsiCo, Inc. and Subsidiaries 3. Fiscal years ended December 27, 2014, December 28, 2013 and December 29, 2012 4. (in millions) ...
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