Financial Statements continued
Notes to the consolidated financial statements
continued
3 Significant accounting policies
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold,
terminated or exercised, then hedge accounting is discontinued and the cumulative unrealised gain
or loss recognised in equity is recognised in the income statement immediately. When a hedging
instrument is terminated, but the hedged transaction still is expected to occur, the cumulative gain or
loss at that point remains in equity and is recognised in accordance with the above-mentioned policy
when the transaction occurs. When the hedged item is a non-financial asset, the amount recognised
in equity is transferred to the carrying amount of the asset when it is recognised. In other cases the
amount recognised in equity is transferred to the income statement in the same period that the
hedged item affects the income statement.
(iii) Economic hedges
Hedge accounting is not applied to derivative instruments that economically hedge monetary assets
and liabilities denominated in foreign currencies. Changes in the fair value of such derivatives are
recognised in the income statement as part of foreign currency gains and losses.
(e) Property, Plant and Equipment (P, P E)
(i) Owned assets
Items of property, plant and equipment are measured at cost less government grants received (refer
iv), accumulated depreciation (refer v) and impairment losses (refer accounting policy 3h(ii)).
Cost comprises the initial purchase price increased with expenditures directly attributable to the
acquisition of the asset (like transports and non-recoverable taxes). The cost of self-constructed assets
includes the cost of materials and direct labour and any other costs directly attributable to bringing
the asset to a working condition for its intended use (like an appropriate proportion of production
overheads).
Spare parts that are acquired as part of an equipment purchase and only to be used in connection
with this specific equipment are initially capitalised and amortised as part of the equipment.
Where an item of property, plant and equipment comprises major components having different useful
lives, they are accounted for as separate items of property, plant and equipment.
(ii) Leased assets
Leases in terms of which Heineken assumes substantially all the risks and rewards of ownership
are classified as finance leases. Upon initial recognition P, P E acquired by way of finance lease
is measured at an amount equal to the lower of its fair value and the present value of the minimum
lease payments.
Other leases are operating leases and are not recognised on Heineken's balance sheet.
(iii) Subsequent expenditure
The cost of replacing part of an item of property, plant and equipment is recognised in the carrying
amount of the item if it is probable that the future economic benefits embodied within the part will
flow to Heineken and its cost can be measured reliably. The costs of the day-to-day servicing of
property, plant and equipment are recognised in the income statement as incurred.
(iv) Government grants
Government grants related to plant, property and equipment and grants relating to research and
development activities are recognised when it is reasonably assured that Heineken will comply with
the conditions attaching to them and the grants will be received.
7C Heineken N.V.
I O Annual Report 2006
