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Intangible Assets | 12 Months Ended
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Dec. 31, 2023
Disclosure of detailed information about intangible assets [abstract] |
Intangible Assets | Intangible Assets
| Rights to Produce and Distribute Coca-Cola trademark Products | Goodwill | Other indefinite lived intangible assets | Technology costs and management systems | Development systems | Other amortizable | Total
Balance as of January 1, 2021 | Ps. 77,396 | Ps. 23,431 | Ps. 1,148 | Ps. 6,709 | Ps. 176 | Ps. 737 | Ps. 109,597
Purchases (1) | — | — | 135 | 370 | 673 | 113 | 1,291
Transfer | — | — | — | 255 | (469) | 214 | —
Disposals | — | — | (3) | — | — | — | (3)
Effect of movements in exchange rates | (1,257) | (522) | (88) | (374) | (5) | (24) | (2,270)
Changes in value on the recognition of inflation effects | — | — | — | — | — | 62 | 62
Cost as of December 31, 2021 | Ps. 76,139 | Ps. 22,909 | Ps. 1,192 | Ps. 6,960 | Ps. 375 | Ps. 1,102 | Ps. 108,677
Balance as of January 1, 2022 | Ps. 76,139 | Ps. 22,909 | Ps. 1,192 | Ps. 6,960 | Ps. 375 | Ps. 1,102 | Ps. 108,677
Purchases (1) | — | — | — | 46 | 1,138 | 4 | 1,188
Additions from business combinations (See Note 4.1.1) | 1,116 | 205 | — | 17 | — | — | 1,338
Transfer | — | — | — | 65 | (158) | 93 | —
Disposals | — | — | — | (775) | — | — | (775)
Effect of movements in exchange rates | (756) | 144 | (150) | (51) | (13) | (70) | (896)
Changes in value on the recognition of inflation effects | — | — | — | — | — | 80 | 80
Cost as of December 31, 2022 | Ps. 76,499 | Ps. 23,258 | Ps. 1,042 | Ps. 6,262 | Ps. 1,342 | Ps. 1,209 | Ps. 109,612
Balance as of January 1, 2023 | Ps. 76,499 | Ps. 23,258 | Ps. 1,042 | Ps. 6,262 | Ps. 1,342 | Ps. 1,209 | Ps. 109,612
Purchases (1) | — | — | 4 | 385 | 963 | 25 | 1,377
Transfer | (224) | — | 224 | 307 | (708) | 401 | —
Disposals | — | (2) | — | (1) | — | (61) | (64)
Effect of movements in exchange rates | (1,568) | (916) | 44 | (77) | (30) | (158) | (2,705)
Changes in value on the recognition of inflation effects | — | — | — | — | — | 70 | 70
Cost as of December 31, 2023 | Ps. 74,707 | Ps. 22,340 | Ps. 1,314 | Ps. 6,876 | Ps. 1,567 | Ps. 1,486 | Ps. 108,290
| Rights to Produce and Distribute Coca-Cola trademark Products | Goodwill | Other indefinite lived intangible assets | Technology costs and management systems | Development systems | Other amortizable | Total
Accumulated amortization |  |  |  |  |  |  |
Balance as of January 1, 2021 | Ps. (745) | Ps. — | Ps. — | Ps. (4,353) | Ps. — | Ps. (528) | Ps. (5,626)
Amortization expense | — | — | — | (594) | — | (294) | (888)
Disposals | — | — | — | — | — | — | —
Effect of movements in exchange rate | — | — | — | 53 | — | 10 | 63
Changes in value on the recognition of inflation effects | — | — | — | (52) | — | — | (52)
Balance as of December 31, 2021 | Ps. (745) | Ps. — | Ps. — | Ps. (4,946) | Ps. — | Ps. (812) | Ps. (6,503)
Amortization expense | — | — | — | (522) | — | (246) | (768)
Disposals | — | — | — | 775 | — | — | 775
Effect of movements in exchange rate | — | — | — | 96 | — | 5 | 101
Changes in value on the recognition of inflation effects | — | — | — | (94) | — | (1) | (95)
Balance as of December 31, 2022 | Ps. (745) | Ps. — | Ps. — | Ps. (4,691) | Ps. — | Ps. (1,054) | Ps. (6,490)
Amortization expense |  |  |  | (518) | — | (318) | (836)
Disposals |  |  |  | — | — | 59 | 59
Effect of movements in exchange rate |  |  |  | 205 | — | 12 | 217
Changes in value on the recognition of inflation effects - amortization |  |  |  | (78) | — | — | (78)
Balance as of December 31, 2023 | Ps. (745) | Ps. — | Ps. — | Ps. (5,082) | Ps. — | Ps. (1,301) | Ps. (7,128)
Balance as of December 31, 2021 | Ps. 75,394 | Ps. 22,909 | Ps. 1,192 | Ps. 2,014 | Ps. 375 | Ps. 290 | Ps. 102,174
Balance as of December 31, 2022 | Ps. 75,754 | Ps. 23,258 | Ps. 1,042 | Ps. 1,571 | Ps. 1,342 | Ps. 155 | Ps. 103,122
Balance as of December 31, 2023 | Ps. 73,962 | Ps. 22,340 | Ps. 1,314 | Ps. 1,794 | Ps. 1,567 | Ps. 185 | Ps. 101,162
The Company’s intangible assets such as technology costs and management systems are subject to amortization with a range in useful lives from 3 to 12 years. For the year ended December 31, 2023, the amortization of intangible assets is recognized in cost of goods sold, selling expenses and administrative expenses and amounted to Ps. 12, Ps.93 and Ps. 731, respectively. For the year ended December 31, 2022, the amortization of intangible assets is recognized in cost of goods sold, selling expenses and administrative expenses and amounted to Ps. 13, Ps.84 and Ps.671, respectively. For the year ended December 31, 2021, the amortization of intangible assets is recognized in cost of goods sold, selling expenses and administrative expenses and amounted to Ps. 15, Ps.108 and Ps.765, respectively. (1) Total includes Ps. 359 , Ps. 209 and Ps. 176 outstanding payment to suppliers, as of December 31, 2023, 2022 and 2021 respectively Impairment Tests for Cash-Generating Units Containing Goodwill, Distribution Rights and Other indefinite lived intangible assets For the purpose of impairment testing, goodwill, distribution rights, and other indefinite lived intangible assets are allocated and monitored on an individual country basis, which is considered to be the CGU. The aggregate carrying amounts of goodwill, distribution rights, and other indefinite lived intangible assets allocated to each CGU are as follows:
| 2023 | 2022
Mexico | Ps. 56,662 | Ps. 56,967
Guatemala | 1,684 | 1,691
Nicaragua | 404 | 404
Costa Rica | 1,418 | 1,418
Panama | 1,169 | 1,170
Colombia | 3,635 | 3,583
Brazil | 30,018 | 31,883
Argentina | 245 | 426
Uruguay | 2,381 | 2,512
Total | Ps. 97,616 | Ps. 100,054
The foregoing forecasts reflect the outcomes that the Company considers most likely to occur based on the current situation of each of the CGUs including the macroeconomic situation in each CGU, the foregoing forecasts could differ from the results obtained over time. The value in use of CGUs is determined based on the method of discounted cash flows. The key assumptions used to calculate value in use are: volume, expected annual long-term inflation, and the weighted average cost of capital (“WACC”) used to discount the projected flows. To determine the discount rate, the Company uses the WACC as determined for each of the cash generating units in real terms and as described in the following paragraphs. The estimated discount rates consider market participants’ assumptions. Market participants were selected considering the size, operations and characteristics of the businesses that management believes are similar to those of the Company. The discount rates represent the current market assessment of the risks specific to each CGU, taking into consideration the time value of money and individual risks of the underlying assets that have not been incorporated into the projected cash flows. The discount rate calculation is based on the opportunity cost to a market participant, considering the specific circumstances of the Company and its operating segments and is derived from its WACC. The WACC takes into account both debt and equity. The cost of equity is derived from the expected return on investment by the Company’s investors. The cost of debt is based on the interest-bearing borrowings the Company is obliged to service, which is equivalent to the cost of debt based on the conditions that a creditor would assess in the market. Segment-specific risk is incorporated by applying beta factors which are evaluated annually based on publicly available market data. Market participant assumptions are important because, not only do they include industry data for growth rates, management also assesses how the CGU’s position, relative to its competitors, might change over the forecasted period. The key assumptions used for the value-in-use calculations are as follows: • Cash flows were projected based on actual operating results and the five-year business plan. • For discount cash flows to get the recoverable amount of the units, the Company applies the WACC for each CGU, and the calculation assumes a size premium adjustment. The key assumptions by CGU for impairment test as of December 31, 2023 were as follows:
CGU | Pre-tax WACC | Post –tax WACC | Expected Annual Long-Term Inflation 2024-2028 | Expected Volume Growth Rates 2024-2028
Mexico | 9.0 | % | 6.3 | % | 4.3 | % | 4.4 | %
Brazil | 10.1 | % | 6.8 | % | 3.8 | % | 3.8 | %
Colombia | 12.2 | % | 7.7 | % | 4.2 | % | 6.8 | %
Argentina | 20.8 | % | 16.1 | % | 70.8 | % | 4.8 | %
Guatemala | 9.3 | % | 7.3 | % | 4.0 | % | 14.9 | %
Costa Rica | 11.4 | % | 8.8 | % | 2.9 | % | 6.6 | %
Nicaragua | 23.3 | % | 16.4 | % | 2.6 | % | 6.5 | %
Panama | 11.6 | % | 8.6 | % | 2.0 | % | 7.8 | %
Uruguay | 9.7 | % | 7.4 | % | 5.7 | % | 3.7 | %
The key assumptions by CGU for impairment test as of December 31, 2022 were as follows:
CGU | Pre-tax WACC | Post –tax WACC | Expected Annual Long-Term Inflation 2023-2027 | Expected Volume Growth Rates 2023-2027
Mexico | 9.5 | % | 6.5 | % | 4.3 | % | 2.4 | %
Brazil | 11.6 | % | 7.2 | % | 3.9 | % | 4.3 | %
Colombia | 13.9 | % | 8.0 | % | 3.9 | % | 9.5 | %
Argentina | 27.8 | % | 19.8 | % | 68.0 | % | 4.5 | %
Guatemala | 10.2 | % | 7.6 | % | 4.4 | % | 14.8 | %
Costa Rica | 15.4 | % | 10.2 | % | 3.3 | % | 6.4 | %
Nicaragua | 24.6 | % | 11.8 | % | 4.1 | % | 6.0 | %
Panama | 11.0 | % | 8.3 | % | 2.2 | % | 4.0 | %
Uruguay | 10.2 | % | 7.4 | % | 5.7 | % | 4.0 | %
Sensitivity to Changes in Assumptions As of December 31, 2023, the Company performed impairment sensitivity calculation, taking into account an adverse change in post-tax WACC, according to the country risk premium, using for each country the relative standard deviation between equity and sovereign bonds and an additional sensitivity to the volume of 100 basis points and concluded that no impairment would be recorded. Goodwill, Distribution Rights and Other in definite lived intangible assets
CGU | Change in WACC | Change in Volume Growth CAGR(1) | Effect on Valuation
Mexico | +0.6p.p | -1.0% | Passes by 3.2x
Brazil | +0.8p.p | -1.0% | Passes by 0.9x
Colombia | +0.9p.p | -1.0% | Passes by 1.1x
Argentina | +3.3p.p | -1.0% | Passes by 0.9x
Guatemala | +0.7p.p | -1.0% | Passes by 5.4x
Costa Rica | +0.8p.p | -1.0% | Passes by 4.0x
Nicaragua | +3.3p.p | -1.0% | Passes by 0.8x
Panama | +0.7p.p | -1.0% | Passes by 2.2x
Uruguay | +0.3p.p | -1.0% | Passes by 2.0x
(1) Compound Annual Growth Rate (“CAGR”) The values assigned to the key assumptions represent management’s assessment of future trends in the industry and are based on both external sources and internal sources (historical data). The Company consistently applied its methodology to determine CGU specific WACC’s to perform its annual impairment testing.

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