Mondelez International Business Analysis
Most recently FASB has just released a new rule regarding changes with accounting for equity investments, financial liabilities under fair value, and presentation and disclosure requirements for financial tools. Under equity investments FASB states that all equity investments in unconsolidated entities other than those accounted for using the equity method of accounting will generally be measured at fair value through earnings. Grouping the investments as available for sale for equity securities with readily determinable fair values is being eliminated from financial reporting. For financial liabilities under fair value option according to PwC: changes in fair value due to instrument-specific credit risk will be recognized separately in other comprehensive income to earnings if the financial liability is settled before maturity. Under the new disclosure rule, companies that are not public are no longer obligated to provide the fair value of financial statements carried at amortized cost. For public businesses the only thing being eliminated is the
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requirement to disclose what type of methods and assumptions made to approximate fair value.
Mondelez International is a multinational food and beverage organization that focuses on producing confections that’s based in the United States.
Mondelez International comprises of snacks and food brands from Kraft Foods after their spin-off in 2012. Mondelez International acquired its name from a few Kraft Foods employees which mean word and delicious in romantic languages. The company manages many popular snack brands worldwide with a few notable ones being Oreo, Chips Ahoy!, TUC, Belvita, Triscuit, Cadbury, Trident, Halls, and Stride. Mondelez International produces chocolate, biscuits confections, powdered beverages, coffee, and gum. They are headquartered in the Chicago suburbs and have an impressive portfolio with a few distinguishable ones such as Nabisco, Oreo, LU Tang, Cadbury, and Trident gum. Mondelze International generates around $36 billion in annual revenue and operates in more than 80
countries.
Mondelez International does not appear to own any available-for-sale securities but they do appear to own one investment under cost method accounting. Recently Mondelez International announced that in 4th quarter of 2015 that they will account for their investment with a Venezuelan subsidiary with the cost method. The switch of accounting is the motive of loss of control due to the incapability of maintaining operation in normal course of business and lack of currency exchangeability. At the start of 2016 the company is ceasing accounting for the sub’s net revenues and net assets with the consolidated financial statements. Because of this Mondelez International has also decided to take a onetime accounting charge of $778 million non-tax incentive to remove all assets and liabilities of the Venezuelan subsidiary off the balance sheet. Since the cost method of accounting is being eliminated Mondelez International would have to report this as an equity investment without readily determinable fair values at cost minus impairment and plus or minus subsequent adjustments for observable price changes.
requirement to disclose what type of methods and assumptions made to approximate fair value.
Mondelez International is a multinational food and beverage organization that focuses on producing confections that’s based in the United States.
Mondelez International comprises of snacks and food brands from Kraft Foods after their spin-off in 2012. Mondelez International acquired its name from a few Kraft Foods employees which mean word and delicious in romantic languages. The company manages many popular snack brands worldwide with a few notable ones being Oreo, Chips Ahoy!, TUC, Belvita, Triscuit, Cadbury, Trident, Halls, and Stride. Mondelez International produces chocolate, biscuits confections, powdered beverages, coffee, and gum. They are headquartered in the Chicago suburbs and have an impressive portfolio with a few distinguishable ones such as Nabisco, Oreo, LU Tang, Cadbury, and Trident gum. Mondelze International generates around $36 billion in annual revenue and operates in more than 80
countries.
Mondelez International does not appear to own any available-for-sale securities but they do appear to own one investment under cost method accounting. Recently Mondelez International announced that in 4th quarter of 2015 that they will account for their investment with a Venezuelan subsidiary with the cost method. The switch of accounting is the motive of loss of control due to the incapability of maintaining operation in normal course of business and lack of currency exchangeability. At the start of 2016 the company is ceasing accounting for the sub’s net revenues and net assets with the consolidated financial statements. Because of this Mondelez International has also decided to take a onetime accounting charge of $778 million non-tax incentive to remove all assets and liabilities of the Venezuelan subsidiary off the balance sheet. Since the cost method of accounting is being eliminated Mondelez International would have to report this as an equity investment without readily determinable fair values at cost minus impairment and plus or minus subsequent adjustments for observable price changes.