This company is composed of the parent companies

Running Head: COMPANY ACCOUNTING
Memorandum
To- Board of Directors
From-
Cc-
Date- August 21, 2019
Subject- Introduction of Coca Cola and Analysis of their Consolidation
The analysis of the consolidation aspects are done for assisting the directors as well as the
shareholders of Coca Cola for understanding their management, business, compositions and
performances. This company is composed of the parent companies as well as their
subsidiaries, joint operations, joint ventures as well as some of the associates. Based on the
accounting standard AASB 5, the company is required for preparing the consolidated income
statements on the continuing operations basis (Tjora and Hagen 2015). Moreover, they are
required for preparing consolidated balance sheet, under which the liabilities as well as the
assets of the operations that are discontinued are basically disclosed on the separate line items
that are represented as held for the sale, which is for the year in which the classification of the
held for sale was being made. Further, the cash flow statements are prepared as well as
presented for whole group. The policy of the corporate governance as well as their non-
control interests can be found in the consolidated financial statements and their notes. The
company Coca Cola Amatil is considered as the largest bottlers of the non-alcoholic
beverages of ready to drink in region of Asia Pacific that is among one of the major five
bottlers of Coca Cola, which generally operates in six different countries that are Australia,
Samoa, Indonesia, New Zealand, Papua New Guinea and Fiji. Hence, they are having foreign

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subsidiaries as well as foreign transactions. For maintaining their operations, Coca Cola
raises their capital from the borrowings as well as issuing shares as well as bonds (Schatt et
al. 2016).
The Group’s consolidated financial statements are comprised of those of the parent
organization that is Coca-Cola Amatil Ltd. as well its subsidiaries. It controls the entity when
it is having the power over entity, is being exposed to and it having the rights to, the variable
returns from the involvements with the organization as well as having the ability for affecting
the returns. Moreover, in the preparations of the consolidated financial statements, intra-
group transactions effects, balances as well as unrealized gains and the losses of transactions
in between the entities in Groups are eliminated. The preparation of subsidiaries financial
statements are based on the same period of reporting as of the parent by using the consistent
policies of accounting (Palea 2014).
The approach of the Coca Cola towards the corporate governance goes beyond the
compliance. The boards as well as every levels of the management are basically committed
towards achieving highest level of the standards in areas of the business conduct and
corporate governance. It has the main feature of the internal governance of structure of the
corporate governance that is formed by board of directors, management, shareholder’s
meeting and board of supervisors (Adesina, Nwidobie and Adesina 2015).
The audit committee of the Coca-Cola Amatil is for reviewing the proposed material
transactions between the company as well as its parties related. Further, the audit is
conducted according to the Australian Auditing Standards. The independency of the Group is
according with the requirements of the independence of auditor of the Corporation Act 2001
as well as ethical requirements of APES 110 ethical code for the Professional Accountants,
which are relevant for the audit of Australia’s financial report.

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Coca Cola Amatil recognizes the approach towards the sustainability, which continues for
underpinning the future performances. The framework of sustainability of the company is
focused towards the areas of greatest impact such as communities, environment, wellbeing of
consumer and its people. The company is committed towards reducing the sugar in the
portfolio by the end of the year 2020 and by 2025, targeting towards 20 per cent reduction
(Maratno 2015).
Based on the consolidated balance sheet for the year 2018 of the company, the current asset is
$2,815.2 and the current liability is $1,643.5. This means that the current ratio is 1.71.
Solvency size helps in reflecting the degree of the risks of the operations of the business to
the large extent. Coca cola Amatil has more current assets than its current liabilities that mean
that it is having greater solvency position.
The group measures the non-controlling interest at their proportionate shares of the
identifiable net assets of the subsidiary that results for the year as well as the movements of
the reserves. The equity is attributable to the non-controlling interests of 355.1 (Grossi and
Steccolini 2015).
Goodwill is known as the intangible asset that arises when it acquires other entity such as
reputation, brand name and patent. When acquisitions cost is more than identifiable net assets
fair value then goodwill is valued. On the contrary if cost is less than identifiable net assets
fair value then gain on the bargain purchase occurs. Generally, goodwill is found in
intangible assets under the section of the non-current assets on the consolidated balance sheet
and their concerned notes. Coca Cola Amatil consolidated balance sheet as well as note 9
(Jacoby 2018).
It is because of the results of the operations of Indonesian business as well as limited excess
of the recoverable amount that are above of CGU’s carrying value, the CGU carrying value is

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susceptible towards the impairment. The company has acquired the goodwill of $152.9
million at 31st December 2018. The uncertainty of financial outcome of the processes of sale
as well as the wide ranges of the received offers, Coca Cola Amatil has recognized the non-
cash impairment of carrying value of net assets of SPC to zero. This impairment of the
company’s business of SPC does not influence the underlying result. However, it is reflected
in the result of statutory. The non-cash impairment of carrying value of the net assets of SPC
held for the sale of amount $146.9 million before the tax in year 2018. However, it has
reduced the carrying value of the net assets of SPC held for sale to zero at 31st December
2018 (Ccamatil.com. 2019).
As the part of the capital as well as strategy of the risk management, the Group uses the
financial instruments for hedging against the exposure of the Group for the fluctuations that
are adverse in the risks of the market. The hedges are then marked-to-market for determining
the fair value at the regular intervals for test the effectiveness of hedge between the hedging
instrument and the underlying hedged item. The amount that Group has received is $67.5
million, which is as the cash collateral pledged from the external counterparties because of
the changes in hedge contract fair value as well as for minimizing the impact of the credit
default. At 31 December 2018, I the committed collaterals would have comprised in
arrangements of master netting on the portfolio of derivatives then net assets would have
reduced to the amount of $13.6 net derivative liability (Ccamatil.com. 2019).
The foreign currency risk of the Group arises from the highly probable forecasting of
transactions for the receipts as well as payments settled in the foreign currencies as well as
prices that are dependent on the foreign currencies respectively. It also includes borrowing,
cash, and term deposits that are denominated in the foreign currency as well as translations of
the financial statements of foreign subsidiaries of Coca Cola Amatil. The exposures of the

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foreign currency have been progressively helps the ranges of 25% to increase up to 100% in
the year 2018.
All transactions that are done with the parties related are being conducted under the normal
commercial conditions and terms. The receivables as well as the payable balances are
unsecured and at the end of the year, the occurrence of settlement in cash. Moreover, no
guarantees has been received or provided for any of the related receivables of party and there
has been no raised provision for the allowances of the doubtful receivables that relates to the
amount, which are owed by the related parties (Gillis et al. 2014).
Hence, this memo includes all the details of the operations of Coca Cola Amatil. This memo
would be useful in understanding the operations of the company as well as its subsidiaries.
Kind Regards,
Coca Cola Amatil Limited

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Reference
Adesina, J.B., Nwidobie, B.M. and Adesina, O.O., 2015. Capital structure and financial
performance in Nigeria. International Journal of Business and Social Research, 5(2), pp.21-
31.
Ccamatil.com. (2019). [online] Available at:
https://www.ccamatil.com/-/media/Cca/Corporate/Files/Annual-Reports/2019/2018-Annual-
Report.ashx [Accessed 21 Aug. 2019].
Gillis, P., Petty, R., Suddaby, R. and Nobes, C., 2014. The development of national and
transnational regulation on the scope of consolidation. Accounting, auditing & accountability
journal.
Grossi, G. and Steccolini, I., 2015. Pursuing private or public accountability in the public
sector? Applying IPSASs to define the reporting entity in municipal
consolidation. International Journal of Public Administration, 38(4), pp.325-334.
Jacoby, S.M., 2018. The embedded corporation: Corporate governance and employment
relations in Japan and the United States. Princeton University Press.
Maratno, S.F.E., 2015. The Determinant Factors of Goodwill Disclosure Level: Survey at
Companies Listed in Indonesia Stock Exchange. Disclosure, 6(2).
Palea, V., 2014. Are IFRS value-relevant for separate financial statements? Evidence from
the Italian stock market. Journal of International Accounting, Auditing and Taxation, 23(1),
pp.1-17.
Schatt, A., Doukakis, L., Bessieux-Ollier, C. and Walliser, E., 2016. Do goodwill
impairments by European firms provide useful information to investors?. Accounting in
Europe, 13(3), pp.307-327.

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Tjora, A. and Hagen, L.J.K., 2015. Compliance with Goodwill Accounting in a Low
Enforcement Environment-An empirical study of Swedish listed companies (Master's thesis).

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Appendices
Figure 1: Consolidated Balance Sheet

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Figure 2: Investments in Subsidiaries

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Figure 3: Consolidated Changes in Equity