Intangible assets
Goodwill, being the difference between the price
paid and the valuation, calculated according to
Heineken policies of newly acquired participations
in which at least significant influence is exercised
over management policy, is offset against Group
funds. Moreover, in the case of acquisition of bever
age wholesalers, the purchase price is almost totally
determined by the client base, which, as an
intangible fixed asset, in line with Group accounting
principles is not shown as an asset. Hence, a
significant part ofthe purchase price is goodwill.
Costs of other intangible assets, including brands,
patents, licences, software, research and develop
ment, are charged directly to the statement of income.
Accounting policies for the valuation of
assets and liabilities
Fixed assets Tangible fixed assets have been valued
on the basis of replacement cost and, with the
exception of sites, after deduction of cumulative
depreciation.
The following average economic life-table is applied
in determing depreciation:
Plants and sites 30-40 years
Machinery and installations 10-30 years
Other fixed operating assets 5-10 years
The replacement cost is based on valuations by
internal and external experts, taking technical and
economic developments into account, and
supported by the experience gained in the construc
tion of establishments worldwide. Projects under
construction are stated at cost of acquisition. The
non-consolidated participations in which a signifi
cant influence is exercised over management policy
are stated at the Heineken share in the net asset
value. As far as possible this net asset value is deter
mined on the basis ofthe Heineken accounting poli
cies. The other non-consolidated participations are
valued at the cost of acquisition, after deduction of
provisions considered necessary. Loans to non-conso
lidated participations and other financial fixed assets
are shown at par value, less a provision for bad debts.
Current assets stocks obtained from third parties
have been valued on the basis of replacement cost.
The replacement cost is based on the prices of
current purchase contracts and on market prices
applicable on the balance sheet date. Finished
products and products in process are valued at
manufacturing cost, based on replacement cost
and taking into account the stage of processing.
Stocks of spare parts are depreciated on a straight-
line basis in view of the reduction of application
possibility. Provisions on stocks are made up to the
recoverable amount or net realizable value where
this is lower than the replacement value.
Prepayments on stocks are stated at par value.
Accounts receivable are shown at par value, after
deduction of a provision for bad debts and less the
amount of deposits due in line with the obligation to
take back own packaging materials. Securities are
valued at the cost of acquisition except where the
market price or the estimated market value of unlis
ted securities is lower. Cash at bank and in hand is
stated at par value.
Revaluations Differences in valuation resulting
from revaluation are credited or debited to the
Group funds, where applicable after deduction of
an amount for deferred tax liabilities.
Investment facilities equalization account
The purpose of the investment facilities equalization
account is to apportion the amounts received under
arrangements in several countries with regard to
investments over the estimated life ofthe assets
concerned.
Provisions j^g provision for deferred tax liabilities is
calculated at the nominal value for timing differences
in valuation between the balance sheet and the
statement of financial condition for fiscal purposes,
and the taxes on profit distributions which are borne
by the Group. Calculation ofthe liabilities takes
place at the tax rates applicable on the balance sheet
date, and at par value. Deferred tax assets are netted
off with deferred tax liabilities, taking into account
the terms of the deferred tax items. Net deferred tax
HEINEKEN N. V.
ANNUAL ACCOUNTS
19 9 7
51
