Property, Plant and Equipment Accounting Policy

Property, plant and equipment are stated at cost. Repair and maintenance costs that do not improve service potential or extend economic life are expensed as incurred. Depreciation is recorded principally by the straight-line method over the estimated useful lives of Coca-Cola's assets, which are reviewed periodically and generally have the following ranges: buildings and improvements: 40 years or less; and machinery, equipment and vehicle fleet: 20 years or less. Land is not depreciated, and construction in progress is not depreciated until ready for service. Leasehold improvements are amortized using the straight-line method over the shorter of the remaining lease term, including renewals that are deemed to be reasonably assured, or the estimated useful life of the improvement. Depreciation is not recorded during the period in which a long-lived asset or disposal group is classified as held for sale, even if the asset or disposal group continues to generate revenue during the period. Depreciation expense, including the depreciation expense of assets under capital lease, totaled $1,716 million, $1,727 million and $1,704 million in 2014, 2013 and 2012, respectively. Amortization expense for leasehold improvements totaled $20 million, $16 million and $19 million in 2014, 2013 and 2012, respectively.

Certain events or changes in circumstances may indicate that the recoverability of the carrying amount of property, plant and equipment should be assessed, including, among others, a significant decrease in market value, a significant change in the business climate in a particular market, or a current period operating or cash flow loss combined with historical losses or projected future losses. When such events or changes in circumstances are present, Coca-Cola estimates the future cash flows expected to result from the use of the asset or asset group and its eventual disposition. These estimated future cash flows are consistent with those Coca-Cola uses in internal planning. If the sum of the expected future cash flows (undiscounted and without interest charges) is less than the carrying amount, Coca-Cola recognizes an impairment loss. The impairment loss recognized is the amount by which the carrying amount exceeds the fair value. Coca-Cola uses a variety of methodologies to determine the fair value of property, plant and equipment, including appraisals and discounted cash flow models, which are consistent with the assumptions Coca-Cola believes hypothetical marketplace participants would use.

Source: Coca-Cola Co., Annual Report

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Property, Plant and Equipment Disclosure

Coca-Cola Co., Statement of Financial Position, Property, Plant and Equipment

USD $ in millions

 
Dec 31, 2014 Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010
Land 972  1,011  997  1,141  1,122 
Buildings and improvements 5,539  5,605  5,307  5,240  4,883 
Machinery, equipment and vehicle fleet 18,225  17,551  16,203  15,504  14,247 
Construction in progress 522  865  979  1,266  1,454 
Property, plant and equipment, gross 25,258  25,032  23,486  23,151  21,706 
Accumulated depreciation (10,625) (10,065) (9,010) (8,212) (6,979)
Property, plant and equipment, net 14,633  14,967  14,476  14,939  14,727 

Source: Based on data from Coca-Cola Co. Annual Reports

Item Description The company
Land Carrying amount as of the balance sheet date of real estate held for productive use. This excludes land held for sale. Coca-Cola Co.'s land increased from 2012 to 2013 but then declined significantly from 2013 to 2014.
Buildings and improvements Carrying amount as of the balance sheet date of long-lived, depreciable assets that include building structures held for productive use including any addition, improvement, or renovation to the structure, such as interior masonry, interior flooring, electrical, and plumbing. Coca-Cola Co.'s buildings and improvements increased from 2012 to 2013 but then slightly declined from 2013 to 2014.
Machinery, equipment and vehicle fleet Carrying amount as of the balance sheet date of long-lived, depreciable asset used in production process to produce goods and services. Coca-Cola Co.'s machinery, equipment and vehicle fleet increased from 2012 to 2013 and from 2013 to 2014.
Construction in progress Carrying amount at the balance sheet date of long-lived asset under construction that include construction costs to date on capital projects that have not been completed and assets being constructed that are not ready to be placed into service. Coca-Cola Co.'s construction in progress declined from 2012 to 2013 and from 2013 to 2014.
Property, plant and equipment, gross Carrying amount at the balance sheet date for long-lived physical assets used in the normal conduct of business and not intended for resale. This can include land, physical structures, machinery, vehicles, furniture, computer equipment, construction in progress, and similar items. Amount does not include depreciation. Coca-Cola Co.'s property, plant and equipment, gross increased from 2012 to 2013 and from 2013 to 2014.
Property, plant and equipment, net Tangible assets that are held by an entity for use in the production or supply of goods and services, for rental to others, or for administrative purposes and that are expected to provide economic benefit for more than one year; net of accumulated depreciation. Examples include land, buildings, and production equipment. Coca-Cola Co.'s property, plant and equipment, net increased from 2012 to 2013 but then slightly declined from 2013 to 2014 not reaching 2012 level.

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Property, Plant and Equipment Ratios (Summary)

Coca-Cola Co., Property, Plant and Equipment Ratios

 
Dec 31, 2014 Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010
Average age 43.75% 41.90% 40.06% 37.31% 33.90%
Estimated total useful life (years) 14 14 13 13 17
Estimated age, time elapsed since purchase (years) 6 6 5 5 6
Estimated remaining life (years) 8 8 8 8 11
Ratio Description The company
Average age As long as straight-line depreciation is used, this is an accurate estimate of asset age as a percentage of depreciable life. The relative age is a useful measure of whether the company's fixed asset base is old or new. Newer assets are likely to be more efficient. Coca-Cola Co.'s average age of depreciable property, plant and equipment deteriorated from 2012 to 2013 and from 2013 to 2014.
Estimated total useful life Over longer time periods, this ratio is a useful measure of company's depreciation policy and can be used for comparisons with competitors. Coca-Cola Co.'s estimated total useful life of depreciable property, plant and equipment increased from 2012 to 2013 and from 2013 to 2014.
Estimated time elapsed since purchase The approximate age in years of a company's fixed assets. Useful for comparison purposes. Coca-Cola Co.'s estimated time elapsed since purchase of depreciable property, plant and equipment deteriorated from 2012 to 2013 and from 2013 to 2014.
Estimated remaining life Coca-Cola Co.'s estimated remaining life of depreciable property, plant and equipment increased from 2012 to 2013 but then slightly declined from 2013 to 2014 not reaching 2012 level.

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Average Age

 
Dec 31, 2014 Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010
Selected Financial Data (USD $ in millions)
Accumulated depreciation 10,625  10,065  9,010  8,212  6,979 
Property, plant and equipment, gross 25,258  25,032  23,486  23,151  21,706 
Land 972  1,011  997  1,141  1,122 
Ratio
Average age1 43.75% 41.90% 40.06% 37.31% 33.90%

2014 Calculations

1 Average age = 100 × Accumulated depreciation ÷ (Property, plant and equipment, gross – Land)
= 100 × 10,625 ÷ (25,258 – 972) = 43.75%

Ratio Description The company
Average age As long as straight-line depreciation is used, this is an accurate estimate of asset age as a percentage of depreciable life. The relative age is a useful measure of whether the company's fixed asset base is old or new. Newer assets are likely to be more efficient. Coca-Cola Co.'s average age of depreciable property, plant and equipment deteriorated from 2012 to 2013 and from 2013 to 2014.

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Estimated Total Useful Life

 
Dec 31, 2014 Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010
Selected Financial Data (USD $ in millions)
Property, plant and equipment, gross 25,258  25,032  23,486  23,151  21,706 
Land 972  1,011  997  1,141  1,122 
Depreciation expense 1,736  1,743  1,723  1,672  1,204 
Ratio
Estimated total useful life (years)1 14 14 13 13 17

2014 Calculations

1 Estimated total useful life (years) = (Property, plant and equipment, gross – Land) ÷ Depreciation expense
= (25,258 – 972) ÷ 1,736 = 14

Ratio Description The company
Estimated total useful life Over longer time periods, this ratio is a useful measure of company's depreciation policy and can be used for comparisons with competitors. Coca-Cola Co.'s estimated total useful life of depreciable property, plant and equipment increased from 2012 to 2013 and from 2013 to 2014.

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Estimated Age, Time Elapsed Since Purchase

 
Dec 31, 2014 Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010
Selected Financial Data (USD $ in millions)
Accumulated depreciation 10,625  10,065  9,010  8,212  6,979 
Depreciation expense 1,736  1,743  1,723  1,672  1,204 
Ratio
Time elapsed since purchase (years)1 6 6 5 5 6

2014 Calculations

1 Time elapsed since purchase (years) = Accumulated depreciation ÷ Depreciation expense
= 10,625 ÷ 1,736 = 6

Ratio Description The company
Estimated time elapsed since purchase The approximate age in years of a company's fixed assets. Useful for comparison purposes. Coca-Cola Co.'s estimated time elapsed since purchase of depreciable property, plant and equipment deteriorated from 2012 to 2013 and from 2013 to 2014.

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Estimated Remaining Life

 
Dec 31, 2014 Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010
Selected Financial Data (USD $ in millions)
Property, plant and equipment, net 14,633  14,967  14,476  14,939  14,727 
Land 972  1,011  997  1,141  1,122 
Depreciation expense 1,736  1,743  1,723  1,672  1,204 
Ratio
Estimated remaining life (years)1 8 8 8 8 11

2014 Calculations

1 Estimated remaining life (years) = (Property, plant and equipment, net – Land) ÷ Depreciation expense
= (14,633 – 972) ÷ 1,736 = 8

Ratio Description The company
Estimated remaining life Coca-Cola Co.'s estimated remaining life of depreciable property, plant and equipment increased from 2012 to 2013 but then slightly declined from 2013 to 2014 not reaching 2012 level.

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