Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Accounting Basics Expert

Q1) In its 1999 annual report, Coca-Cola describes impact of foreign exchange on its operations as follows:

"Our international operations are subject to certain opportunities and risks, including currency fluctuations and government actions. We closely monitor our operations in each country and look to adopt suitable strategies which are responsive to changing economic and political environments and to fluctuations in foreign currencies. We utilize approximately 60 functional currencies. Due to our global operations, weaknesses in some of these currencies are frequently offset by strengths in others. In 1999, 1998, and 1997, weighted-average exchange rates for foreign currencies, and for certain individual currencies, strengthened (weakened) against U.S. dollar as follows:

Year Ended December 31, 1999 1998 1997
All currencies Even (9%) (10%)
Australian dollar 3% (16%) (6%)
British pound (2%) 2% 4%
Canadian dollar Even (7%) (1%)
French franc (2%) (3%) (12%)
German mark (2%) (3%) (13%)
Japanese yen 15% (6%) (10%)

These percentages don't include effects of our hedging activities and, hence, don't reflect actual impact of fluctuations in exchange on our operating results. Our foreign currency management program mitigates over time portion of impact of exchange on net income and earnings per share. Impact of stronger U.S. dollar reduced our operating income by approximately 4 percent in 1999 and by approximately 9 percent in 1998.

Exchange gains (losses)-net amounted to $87 million in 1999, ($34) million in 1998 and ($56) million in 1997, and were recorded in other income-net. Exchange gains (losses)-net comprises re-measurement of certain currencies into functional currencies and costs of hedging certain exposures of our balance sheet."

problems:

1. Which translation methodology or methodologies does Coca-Cola use? What information given helped you draw a conclusion (if you did draw a conclusion)?

2. Given methodology it uses, would you expect it to have translation gains or losses in 1997? In 1998? In 1999? Based on data in the table, describe whether you expected actual gains or losses in each of those years? Were your answers consistent with what actually occured to Coca-Cola in those years?

3. Describe how Coca-Cola could use translation methodology that it does and still have exchange gains and losses that show up in income as described in last paragraph above.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M919655

Have any Question? 


Related Questions in Accounting Basics

Financial paperso the idea is to have the same lenght

Financial Paper So the idea is to have the same lenght, quality and structure. The only thing missing on this paper is a conclusion, that will have to be at least half a page. The company to be compare on the paper will ...

Accounting assignmenttransfer pricing decisionsas a manager

Accounting Assignment Transfer Pricing Decisions As a manager, you may be tasked with making recommendations as to how your organization should structure its transfer pricing. This is especially true in cases when both v ...

Internet case-citizen-centric reportingalthough citizens

Internet Case-Citizen-Centric Reporting Although citizens should be concerned about the performance of government, in truth, few citizens typically review the financial information provided by their government. In part, ...

Imagine you are the responsible accountant for one of our

Imagine you are the responsible accountant for one of our companies. Apart from local gaap or local accounting rules but with regard to HB II (Group financial statement) and with the help of the HB II accounting manual o ...

Case title the website launchyour company meddevice inc has

Case Title: The Website Launch Your Company, MedDevice, Inc., has just received FDA 510(k) clearance of its new, cutting edge medical device which paves the way for the official product launch in a few short months. Your ...

International accounting1 when discussing foreign currency

International Accounting 1. When discussing foreign currency exchange, there are several arrangements. List two of these. 2. A _________ is a contract between two or more parties. 3. What are the timelines for the new re ...

Problem 1conceptual leasing bought a grader for 600000 and

Problem 1 "Conceptual Leasing bought a grader for $600,000 and the leased it back to Parole Inc. on January 1, 2011. The description of the lease follows: • Quarterly Rent Payments=$34,000 • Leaser term= 4 years (16 quar ...

In a recent city meeting it was agreed that the city was

In a recent city meeting, it was agreed that the city was going to build a new town hall. Long-term bonds, intergovernmental transfers, and public donations will be used to construct and maintain the building. The major ...

Assignmentbackgroundphoenix advertising with its main

Assignment Background Phoenix Advertising, with its main headquarters in Charlotte, North Carolina, serves clients that include banks, insurance companies, and retail chains. You're the vice president of human resources ...

Accounting practice set -this case is designed to reinforce

Accounting Practice Set - This case is designed to reinforce certain technical accounting skills that are a prerequisite to a solid understanding of the generally accepted accounting principles that underlie preparation ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen