Coca-Cola Company vs. Pepsi

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The Coca-Cola Company vs. PepsiCo, Inc

Michelle Myles

Professor Hendren

Intermediate Accounting III

November 20, 2011

The Coca-Cola Company versus PepsiCo, Inc

In this paper I will discuss the case of the pension plan between Coca-Cola and PepsiCo Inc. I will be comparing the pension plans of both companies of what they offer as well as the funded status at the end of 2007. You will also see that I have calculated the different rates used by both companies while they are trying to compute their portion of the pension amount. I will also explain through my justification which company myself would want to invest with as a shareholder. And lastly I will justify which company I would like to work with as an employee.

1. Compare the pension plans of Coca-Cola and PepsiCo, including type of plan and funded status at 2007 year-end.

First thing that I need to point out that both companies Coca-Cola and PepsiCo offer 401k pensions, medical, as well as life insurance for their employees, unfortunately stipulations apply so that not all employees are eligible, covered, or participate in these plans. Let’s break down what both companies do have so one can see what one company has over the other.

Coca-Cola has a contribution plan that is defined that is designed for all the US employees as well as some of the employees internationally. This plan is self explanatory both, the company and the employee, makes contributions. A benefit for the employer is the tax benefit that they receive, “substantial tax benefit”. Coca-Cola also has a defined pension which is a nonqualified, unfunded plan that is solely geared towards the company’s officers, most of the US employees and the international employees. Unfortunately for the company there are no tax benefits to this plan because the company usually doesn’t make any contributions. At the end of 2007 Coca-Cola decides to eliminate this plan to limit the exposure to the company.

PepsiCo also has a defined pension...