Notes to the Consolidated Balance Sheet, Profit and Loss Account and Cash Flow Statement for 2001
Valuation of assets and liabilities
Intangible fixed assets
Goodwill, the difference between the price paid for partici
pating interests and their valuation according to Fleineken
accounting policies, is charged to shareholders' equity
where the group exercises at least a significant influence
on management decisions. In the case of acquisition of
beverage wholesalers, the purchase price is almost entire
ly determined by the customer base and this element,
being an intangible asset, is not capitalised, so that a large
part of the purchase price in fact constitutes goodwill.
When the relevant legal requirements are changed,
goodwill will be capitalised and amortised over the expect
ed economic life of the assets concerned.
Other intangible fixed assets are capitalised and amor
tised by the straight-line method over three years. If the
net realisable value of intangible fixed assets is less than
the carrying amount, a diminution in value is applied.
Costs of internally developed brands, patents and licences
and research and development are expensed.
Brands, patents and licences purchased with
acquisitions are treated as part of the goodwill paid.
Tangible fixed assets
Except for land, which is not depreciated, tangible fixed
assets are stated at replacement cost less accumulated
depreciation. The following average useful lives are used
for depreciation purposes:
Buildings 30-40 years
Plant and equipment 10-30 years
Other fixed assets 5-10 years
The replacement cost is based on appraisals by internal
and external experts, taking into account technical and
economic developments and supported by the experience
gained in the construction of breweries throughout the
world. Projects under construction are included at cost.
Financial fixed assets
Non-consolidated participating interests where the group
has a significant influence are stated at the Heineken
share of the net asset value, which is arrived at as far as
possible on the basis of the Heineken accounting policies.
Other non-consolidated participating interests are stated
at cost less any necessary provisions.
Loans to non-consolidated companies and other finan
cial fixed assets are carried at face value, less provisions
for credit risks.
Impairment of assets
Regularly it is assessed whether there are any indications
that intangible and tangible fixed assets may be impaired.
If any such indication exist, the net realisable value of
the assets concerned is determined. If the net realisable
value of an asset is less than its book value, the difference
is deducted from the carrying amount as an impairment
loss and charged to the profit and loss account.
Current assets
Stocks bought in from third parties are stated at replace
ment cost, arrived at on the basis of prices from current
purchase contracts and latest prices as at balance sheet
date. Finished products and work in progress are stated at
manufactured cost based on replacement cost and taking
into account the production stage reached. Stocks of
spare parts are depreciated on a straight-line basis taking
account of obsolescence. If the recoverable amount or net
realisable value of stocks is less than their replacement
cost, provisions are made in respect of the difference.
Advance payments on stocks are stated at face value.
Receivables are carried at face value less a provision for
bad debts and less the amount of deposits on returnable
packaging.
Securities are carried at the lower of historical cost and
quoted price, or estimated market value in the case of
unlisted securities.
Cash is stated at face value.
Revaluations
Differences in carrying amounts due to revaluations are
credited or debited to group equity, less an amount in
respect of deferred tax liabilities where applicable.
Investment facilities equalisation account
The purpose of the investment facilities equalisation
account is to apportion amounts received under
investment grant schemes in certain countries over the
estimated useful lives of the assets concerned.
Provisions
The provision for deferred tax liabilities is formed in
respect of timing differences between the balance sheet
for reporting purposes and the recognition of assets and
liabilities for tax purposes as well as taxation on profit dis
tributions borne by the group. The liabilities are calculated
at the standard tax rates on balance sheet date and are
stated at face value. Deferred tax assets are netted off
HEINEKEN N.V. ANNUAL REPORT2001
54