Pepsico Inc and Coca-Cola

by | Mar 5, 2025 | Finance

 

Using current literature, you will be looking at Pepsico Inc and Coca-Cola Co for the fiscal year ended 2015 and completing a variety of analysis on both of these companies. You will specifically be using:
• Pepsico Inc 2015 annual report
• Pepsico Inc 2015 10-K
• Pepsico Inc 2015 Def 14A
• CocaCola Co 2015 annual report
• CocaCola Co 2015 2015 10-K
• CocaCola Co 2015 Def 14A

a. Consider the inventory accounts on the balance sheet for each company, along with the accompanying footnote. What are the most relevant assertions that management is making with regard to its inventory?
b. What assertions are implied in the Property, Plant, and Equipment account? How would valuation be affected if each company decided to downsize and eliminate some of its storefront locations?
c. Examine the assets on the balance sheet of each company. Identify the assets that are subject to (1) fair value adjustments, (2) impairment tests, (3) estimates to either net realizable value or lower of cost or market value. What are the implications for audit evidence that will be gathered for these accounts?
d. Consider the debt account on each balance sheet, along with the accompanying footnote. What are the most relevant assertions that management is making with regard to its debt?
e. Describe the primary risks facing PepsiCo. Describe the primary risks facing Coca-Cola. Compare the risks of PepsiCo and Coca-Cola. Why would an auditor be concerned with these risks? Provide a short example of how you would use audit software to detect this risk.
f. What are the key revenue accounts for PepsiCo and Coca-Cola? What accounts involve critical accounting estimates? What do their footnotes say about the use of accounting estimates? What risk do these estimates pose for the auditor?
g. What are the key cash and liquid asset accounts for each company? What types of marketable securities does each company possess? What are the critical accounting policies for these accounts?
h. Review the statement of cash flows and management discussion and analysis related to the liquidity of each company. What are the significant trends that you note? What are the audit implications of the different trends of each company?
i. Are there any ethical issues in these areas that an audit team should be watching out for? If so, what areas?
j.

Sample solution

Dante Alighieri played a critical role in the literature world through his poem Divine Comedy that was written in the 14th century. The poem contains Inferno, Purgatorio, and Paradiso. The Inferno is a description of the nine circles of torment that are found on the earth. It depicts the realms of the people that have gone against the spiritual values and who, instead, have chosen bestial appetite, violence, or fraud and malice. The nine circles of hell are limbo, lust, gluttony, greed and wrath. Others are heresy, violence, fraud, and treachery. The purpose of this paper is to examine the Dante’s Inferno in the perspective of its portrayal of God’s image and the justification of hell. 

In this epic poem, God is portrayed as a super being guilty of multiple weaknesses including being egotistic, unjust, and hypocritical. Dante, in this poem, depicts God as being more human than divine by challenging God’s omnipotence. Additionally, the manner in which Dante describes Hell is in full contradiction to the morals of God as written in the Bible. When god arranges Hell to flatter Himself, He commits egotism, a sin that is common among human beings (Cheney, 2016). The weakness is depicted in Limbo and on the Gate of Hell where, for instance, God sends those who do not worship Him to Hell. This implies that failure to worship Him is a sin.


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God is also depicted as lacking justice in His actions thus removing the godly image. The injustice is portrayed by the manner in which the sodomites and opportunists are treated. The opportunists are subjected to banner chasing in their lives after death followed by being stung by insects and maggots. They are known to having done neither good nor bad during their lifetimes and, therefore, justice could have demanded that they be granted a neutral punishment having lived a neutral life. The sodomites are also punished unfairly by God when Brunetto Lattini is condemned to hell despite being a good leader (Babor, T. F., McGovern, T., & Robaina, K. (2017). While he commited sodomy, God chooses to ignore all the other good deeds that Brunetto did.

Finally, God is also portrayed as being hypocritical in His actions, a sin that further diminishes His godliness and makes Him more human. A case in point is when God condemns the sin of egotism and goes ahead to commit it repeatedly. Proverbs 29:23 states that “arrogance will bring your downfall, but if you are humble, you will be respected.” When Slattery condemns Dante’s human state as being weak, doubtful, and limited, he is proving God’s hypocrisy because He is also human (Verdicchio, 2015). The actions of God in Hell as portrayed by Dante are inconsistent with the Biblical literature. Both Dante and God are prone to making mistakes, something common among human beings thus making God more human.

To wrap it up, Dante portrays God is more human since He commits the same sins that humans commit: egotism, hypocrisy, and injustice. Hell is justified as being a destination for victims of the mistakes committed by God. The Hell is presented as being a totally different place as compared to what is written about it in the Bible. As a result, reading through the text gives an image of God who is prone to the very mistakes common to humans thus ripping Him off His lofty status of divine and, instead, making Him a mere human. Whether or not Dante did it intentionally is subject to debate but one thing is clear in the poem: the misconstrued notion of God is revealed to future generations.

 

References

Babor, T. F., McGovern, T., & Robaina, K. (2017). Dante’s inferno: Seven deadly sins in scientific publishing and how to avoid them. Addiction Science: A Guide for the Perplexed, 267.

Cheney, L. D. G. (2016). Illustrations for Dante’s Inferno: A Comparative Study of Sandro Botticelli, Giovanni Stradano, and Federico Zuccaro. Cultural and Religious Studies, 4(8), 487.

Verdicchio, M. (2015). Irony and Desire in Dante’s” Inferno” 27. Italica, 285-297.

. Inventory Accounts and Assertions

  • Relevant Assertions:
    • Existence: That the inventory actually exists at the balance sheet date.
    • Completeness: That all inventory items are included in the recorded balances.
    • Valuation: That inventory is valued at the lower of cost or net realizable value.
    • Rights and Obligations: That the company has the rights to the inventory.
    • Presentation and Disclosure: That inventory is properly classified and disclosed in the financial statements.
  • Footnote Analysis:
    • The footnotes will reveal the inventory costing methods (e.g., FIFO, weighted-average), any write-downs, and the composition of inventory (e.g., raw materials, work-in-progress, finished goods).
    • Auditors would be concerned with the consistency of the costing method, and the methods used to estimate net realizable value.

b. Property, Plant, and Equipment (PP&E) and Assertions

  • Implied Assertions:
    • Existence: That the PP&E assets exist.
    • Completeness: That all PP&E assets are recorded.
    • Valuation: That PP&E is recorded at historical cost less accumulated depreciation and impairment.
    • Rights and Obligations: That the company has the rights to the PP&E.
    • Presentation and Disclosure: That PP&E is properly classified and disclosed.

. Inventory Accounts and Assertions

  • Relevant Assertions:
    • Existence: That the inventory actually exists at the balance sheet date.
    • Completeness: That all inventory items are included in the recorded balances.
    • Valuation: That inventory is valued at the lower of cost or net realizable value.
    • Rights and Obligations: That the company has the rights to the inventory.
    • Presentation and Disclosure: That inventory is properly classified and disclosed in the financial statements.
  • Footnote Analysis:
    • The footnotes will reveal the inventory costing methods (e.g., FIFO, weighted-average), any write-downs, and the composition of inventory (e.g., raw materials, work-in-progress, finished goods).
    • Auditors would be concerned with the consistency of the costing method, and the methods used to estimate net realizable value.

b. Property, Plant, and Equipment (PP&E) and Assertions

  • Implied Assertions:
    • Existence: That the PP&E assets exist.
    • Completeness: That all PP&E assets are recorded.
    • Valuation: That PP&E is recorded at historical cost less accumulated depreciation and impairment.
    • Rights and Obligations: That the company has the rights to the PP&E.
    • Presentation and Disclosure: That PP&E is properly classified and disclosed.

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