Blend all ingredients except coconut in large mixer bowl. Beat 4 minutes at medium speed of electric mixer. Pour into two greased and floured 9" layer pans. Bake at 350~ for 25-30 minutes or until cake springs back when lightly pressed. Do not underbake. Cool in pan for 15 minutes; remove and cool on racks. Fill and frost; sprinkle with coconut. Chill. Refrigerate leftover cake.
Frosting: Combine all ingredients except whipped topping in a bowl; beat until well blended. Fold in thawed whipped topping.