[OpenSpending] Fwd: Coca-Cola's sweet financial bubble
kfbrzezinska at gmail.com
Thu Dec 10 09:45:22 UTC 2015
I think, good for them, and for us: that kind of curiosity is a gift.
On Thu, Dec 10, 2015 at 9:49 AM, Friedrich Lindenberg <
friedrich.lindenberg at gmail.com> wrote:
> Today I learned: some people, when bored, engage in corporate accounting.
> ---------- Forwarded message ----------
> From: Khadija Sharife
> Date: Thu, Dec 10, 2015 at 3:11 AM
> Subject: Coca-Cola's sweet financial bubble
> To: Khadija Sharife
> Hi folks
> If anyone is bored and has free reading time: a curiosity of the
> accounting world:
> Publicly accessible data in company reports can tell you quite a bit about
> what is (or isn't) happening in a company's financial sheets.
> Coca-Cola and other companies involved in tech, beverage, pharma etc
> derive the bulk of their value from internally generated intangible
> capital, like patents, trademarks and the like. But these assets are not
> logged on balance sheets - save as expenses. Only acquired intangibles are
> logged. So, if Coke bought Pepsi, only Pepsi would listed on Coke's balance
> Simply put, there is no method to assess the veracity of expenses, paving
> the way for gross transfer pricing abuse or manipulation between
> subsidiaries of the same parent company.
> In Coke's case, some $33 billion 'offshore' with about $11.5 billion in
> avoided tax.
> And market cap less net tangible assets shows that the company is
> significantly dependent - over 95% - on these very same assets that don't
> exist on paper.
> The law, however, is on their side: the IASB confirms that internally
> developed intangibles don't need to be logged nor do they see a need or an
> audience (given that the only people reports are produced for, according to
> IASB, are investors and the like).
> A short analysis below (Coke declined to respond to most questions but the
> IASB's Upton was kind enough to chat)...
> Many thanks to the folks that helped think through it: Nick, Tiziana,
> Heinrich and Len.
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