CASE 10-10 LET'S GET THAT DEBT OFF THE BALANCE SHEET!

Both COCA-COLA CO. and ^AARRIO^ CORPORATION have improved the appearance of their parent company balance sheets by organizing separate companies and transferring significant amounts of debt to these entities. To avoid including these subsidiaries in their consolidated financial statements, they retained less than 50% of the outstanding common stock in them. You, as an intermediate accounting student, have the assignment to evaluate this action and consider its appropriateness in light of current GAAP. If GAAP is deficient, you are to suggest changes that will make the reporting more representative of economic realit/.

Prepare the report you would submit to fulfill this assignment.