From the e-Activity(see below), briefly discuss the type of contingencies that Coca Cola is
involved in and the accounting treatment of such contingencies. Give your
opinion on whether the notes to the financial statements disclose the necessary
information on the contingencies for interested parties to make an investing
decision. Based on the information disclosed, decide whether you would you
invest in Coca Cola. Justify your rationale.
Suppose management is involved in a situation where the outcome of the
situation is contingent upon certain events to occur; however, management is
unsure of the generally accepted accounting principles for reporting
contingencies. You are the senior accountant, and management has tasked you with
preparing a report on contingencies. Distinguish between a gain contingency and
a loss contingency, and highlight the accounting treatment for each type of
contingency. Also, recommend two (2) improvements to the reporting requirements
on loss contingencies to FASB.Go to Reuters Website to read the article titled “Update 1-Overstock to
Restate 2008 Results” dated February 4, 2010.
http://www.reuters.com/article/2010/02/04/overstock-idUSN049847120100204
evaluate and discuss how the under billings should have been accounted for
in the original financial statements.
Should the under billings be treated as gain contingencies? Explain your
position. (E Activity)Review financial data on Coca-Cola notes to financial statements, located at http://assets.coca-colacompany.com/9b/d3/b75cdce348fa907295f549d2cc7e/2009_12_Coca-Cola_Item8.pdf,
specifically Note 8: Commitments and Contingencies on page 93. Be prepared to
discuss.
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