Coca-Cola versus PepsiCo, Inc.
This report will explain the current effects of IFRS on the pension reporting for Coca Cola and PepsiCo at 2009 year-end, the funding levels and capital gains experienced by Coca Cola and PepsiCo in their respective pension funds. Also, I will evaluate which of the two companies had a more secure pension fund and how the status of the pension fund effect’s the level of risk that must be reported in the annual report. International Reporting Standards (IFRS) are standards that are aimed as a global language that is common for affairs of business, to make sure that the accounts of the company can be understood and are of a certain standard that applies worldwide. IFRS are important to companies that function in many countries. IFRS have been perceived to replace many and different international standards of accounting in a progressive manner. IFRS synchronizes accounting across the European Union, other than the synchronization value making the concept attractive all over the world. They are however still on the subject of using their original name, International Accounting Standards (IAS). IAS was rolled out between the year 1973 and 2001, by the International Accounting Standards Committee (IASC) Board. On April 1, 2001, a new International Accounting Standards Board took hold of the responsibility of coming up with an International Accounting Standards from the IASC. It was in the first meeting that the new Board took up the IAS that existed as well as Standing Interpretations Committee standards (SICs). ISAB has frequently rolled out new standards known as International Financial Reporting Standards (IFRS) According to a report by the Coca-Cola Company, the company rolled out an IFRS adoption strategy, in line with the International Accounting Standards Board. This implementation did not however come without some impacts. These included Operating systems – nonmonetary assets adaptations module which would continue with the process of amortization and depreciation on values, different from those reflected in MFRS as well as changes to some line items mapping in the Company’s Statement of Comprehensive Income. Information Systems – consolidation system changes to disengage from the change and inflation calculation, logic translation in Costa Rica, Nicaragua and Argentina, whose operation environment was an inflammatory one under MFRS, later changing into a non-inflammatory one under IFRS. Business – the consolidated financial accounts of the year ending was the first to comply with IFRS, which applied IFRS1 in consolidating financial statements using IFRS standards. In 2010, consolidation was done using Mexican Financial Reporting Standards (MFRS), according to the report by Castro, García & Karig. To comply with the CNBV requirements, this Report is itemizing the differences in the recognition, measurement and presentation requirements between IFRS and MFRS. When preparing the transitional Statement of Financial Position under IFRS, the Company applied the mandatory exceptions and certain optional exemptions set forth in IFRS 1 to the complete retrospective application of IFRS (2011). In PepsiCo, the company would have to translate standards to and from in order to accommodate the accepted principles, for the US, Generally Accepted Accounting Principles (GAAP). These include items such as revenue recognition as well as brand valuation among others. Under IFRS, there were fairly equal. This made the Global Head of Technical Accounting and Managing Director, John Gallagher, to point out that there was only one interpretation to IFRS, which was by Independence Standards Board (IBS). There came up a debate among many stakeholders, specifically Bridgeman and Gallagher, who were among other interested parties including journalists, leaders of thought and academics. Gallagher was of the opinion that it is part of life that people from different backgrounds have...
References: Castro, J, García, G., & Karig R. (2011). Coca-Cola FEMSA announces its IFRS implementation plan Mexico City. Coca-Cola. Retrieved from http://www.coca-eb/arquivos/kof20110630_6k.pdffrom
Peek, J., A. Reuss and G. Scheuenstuhl. (2008), Evaluating the Impact of Risk Based Funding Requirements on Pension Funds. OECD Publishing. Retrieved from http://www.oecd.org/finance/private-pensions/40764487.pdf
PepsiCo. (2008). Annual Report. PepsiCo, Inc.
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