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					                                  Advanced Accounting

                          Significant influence effects: Coca-Cola

For the year ended December 31, 2007, Coca-Cola used the equity method to account for
its 35% interest in Coca-Cola Enterprises (CCE). For the year ended December 31, 2007,
Coca-Cola reported net income of $5,981 million, 2,313 million average common shares
outstanding, and $2.59 basic earnings per share.

During 2007, CCE reported net income of $711 million and paid total dividends of $116
million. On December 31, 2007, CCE’s retained earnings balance was $1,527 million.

1. Calculate Coca-Cola’s 2007 net income and earnings per share as if Coca-Cola had
accounted for its investment in CCE as securities available-for-sale and CCE had
declared $0 million dividends.

Coca-Cola
"Significant Influence"

                                                   CCE
                                                 Declares
                                                    $0
                                                 Dividends
Coca-Cola's reported income: 2007                   $5,981
Less: Equity income in CCE                           -$249
Plus: CCE dividends                                     $0
Coca-Cola's adjusted SFAS net income:2007           $5,732

Average common shares outstanding: 2007               2,313
Basic earnings per share                              $2.48

EPS difference: pro forma / $2.59 as reported         -4.3%


2. Calculate Coca-Cola’s 2007 net income and earnings per share as if Coca-Cola had
accounted for its investment in CCE as securities available-for-sale and CCE had
declared $116 million dividends.

Coca-Cola
"Significant Influence"
                                                   CCE
                                                 Declares
                                                   $116
                                                 Dividends
                                                  [actual]
Coca-Cola's reported income: 2007                   $5,981
Less: Equity income in CCE                          -$249
Plus: CCE dividends                                   $41
Coca-Cola's adjusted SFAS net income:2007          $5,773

Average common shares outstanding: 2007             2,313
Basic earnings per share                            $2.50

EPS difference: pro forma / $2.59 as reported       -3.6%


3. Calculate Coca-Cola’s 2007 net income and earnings per share as if Coca-Cola had
accounted for its investment in CCE as securities available-for-sale and CCE had
declared $711 million dividends.

Coca-Cola
"Significant Influence"
                                                   CCE
                                                  Declares
                                                   $711
                                                 Dividends
                                                [net income
Coca-Cola's reported income: 2007                     $5,981
Less: Equity income in CCE                             -$249
Plus: CCE dividends                                     $249
Coca-Cola's adjusted SFAS net income:2007             $5,981

Average common shares outstanding: 2007               2,313
Basic earnings per share                              $2.59

EPS difference: pro forma / $2.59 as reported         0.0%


4. Calculate Coca-Cola’s 2007 net income and earnings per share as if Coca-Cola had
accounted for its investment in CCE as securities available-for-sale and CCE had
declared $2,238 million dividends.


Coca-Cola
"Significant Influence"
                                                        CCE
                                                      Declares
                                                       $2,238
                                                     Dividends
                                                [net income + R/E]
Coca-Cola's reported income: 2007                           $5,981
Less: Equity income in CCE                                    -$249
Plus: CCE dividends                               $783
Coca-Cola's adjusted SFAS net income:2007       $6,515

Average common shares outstanding: 2007          2,313
Basic earnings per share                         $2.82

EPS difference: pro forma / $2.59 as reported    8.8%

				
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