<p> Advanced Accounting</p><p>Significant influence effects: Coca-Cola</p><p>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.</p><p>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.</p><p>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.</p><p>Coca-Cola "Significant Influence"</p><p>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</p><p>Average common shares outstanding: 2007 2,313 Basic earnings per share $2.48</p><p>EPS difference: pro forma / $2.59 as reported -4.3%</p><p>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.</p><p>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</p><p>Average common shares outstanding: 2007 2,313 Basic earnings per share $2.50</p><p>EPS difference: pro forma / $2.59 as reported -3.6%</p><p>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.</p><p>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</p><p>Average common shares outstanding: 2007 2,313 Basic earnings per share $2.59</p><p>EPS difference: pro forma / $2.59 as reported 0.0%</p><p>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.</p><p>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</p><p>Average common shares outstanding: 2007 2,313 Basic earnings per share $2.82</p><p>EPS difference: pro forma / $2.59 as reported 8.8%</p>