Question

Case 1: Reporting non-current asset transactions in the financial statements

At the end of 2019, The Coca-Cola Company had total assets of $19.1 billion and total liabilities of $10.7 billion. Included among the assets were property, plant, and equipment with a cost of $5.7 billion and accumulated depreciation of $2.0 billion.

Coca-Cola completed the following selected transactions during 2020:

• The company earned total revenues of $19.8 billion and incurred total expenses of $17.3 billion, which included depreciation of $0.8 billion.

• During the year, Coca-Cola paid $1.1 billion for new property, plant, and equipment and sold old plant assets, receiving cash of $0.2 billion.

• The cost of the assets sold was $0.1 billion; their accumulated depreciation was also $0.1 billion.

Required: Answer the following questions with supporting calculations.

1. Show how Coca-Cola would report property, plant, and equipment on the statement of financial position at 31 December 2020. What was the carrying amount of property, plant, and equipment on that date?

2. How much was the carrying value of the assets that Coca-Cola sold during 2020? Did CocaCola have a gain or loss on the sale of plant assets during 2020? What was the amount of the gain or loss?

3. How much was Coca-Cola’s owners’ equity at 31 December 2019?

4. Did Coca-Cola report a net profit or a net loss in its 2020 statement of financial performance? Calculate the amount.

Answer 1