Molson Coors Brewing Company (Molson Coors) is the fifth-largest brewer in the world. It is one of the leading brewers in the U.S. and Canada; the company’s brands include Coors, Molson Canadian, Carling, and Killian’s Irish Red. Sales exceeded 32 million barrels (1 U.S. barrel equals 31 gallons) for the year ended December 26, 2004. The firm reported $4.3 billion of net sales for 2004. Molson Coors invests in various entities to carry out its brewing, bottling, and canning activities. The investments take the legal form of partnerships, joint ventures, and limited liability corporations, among other arrangements. The firm states in its 2004 annual report that each of these arrangements has been tested to determine whether it qualifies as a VIE under Interpretation No. 46. (Interpretation No. 46R supersedes this interpretation by clarifying certain aspects of its predecessor interpretation. However, most of the content is similar, and either interpretation is sufficient to address this problem.) The following excerpt is taken from the firm’s note on VIEs in its 2004 annual report:

Required
a. Describe the operational purpose of the three VIEs consolidated by Molson Coors.
b. Molson Coors is the primary beneficiary for three investments that the firm identified as VIEs. What criteria did Molson Coors apply to determine that the firm is the primary beneficiary for these three investments?
c. For each investment, Molson Coors reports the income statement impact as a reduction of cost of goods sold on the consolidated income statement. What is the rationale for reporting the impact this way on the income statement?
d. The firm states, “Our partners” share of the operating results of the ventures is eliminated in the minority interests line of the Consolidated Statements of Income. Define minority interests as it appears on the income statement. Discuss why Molson Coors subtracts it to calculate consolidated net income.
e. RMBC, RMMC, and Grolsch are consolidated with the financial statements of Molson Coors because the three investments qualify as VIEs as defined in Interpretation No. 46 and the firm determined that it is the primary beneficiary for the investments. Explain what reporting technique Molson Coors would use to account for the investments if, in fact, they did not qualify as VIEs. What would be the impact on the balance sheet?
What would be the impact on the income statement? What would be the impact on the statement of cash flows?
f. The firm reports that the depreciation expense on the statement of cash flows for 2004 increased by approximately $13.2 million as a result of consolidating the VIEs. Why did consolidating the VIEs increase depreciation expense?