Financial Statements conl i lued
Notes to the consolidated financial statements
continued
3 Significant accounting policies
(i) Assets held for sale
Non-current assets (or disposal groups comprising assets and liabilities) that are expected to be
recovered primarily through sale rather than through continuing use are classified as held for sale.
Immediately before classification as held for sale, the assets (or components of a disposal group) are
remeasured in accordance with Heineken's accounting policies. Thereafter the assets (or disposal
group) are measured at the lower of their carrying amount and fair value less cost to sell. Any
impairment loss on a disposal group first is allocated to goodwill, and then to remaining assets and
liabilities on a pro rata basis, except that no loss is allocated to inventories, financial assets, deferred
tax assets and employee benefit assets, which continue to be measured in accordance with Heineken's
accounting policies. Impairment losses on initial classification as held for sale and subsequent gains or
losses on remeasurement are recognised in the income statement. Gains are not recognised in excess
of any cumulative impairment loss.
(j) Employee benefits
(i) Defined contribution plans
Obligations for contributions to defined contribution pension plans are recognised as an expense in the
income statement when they are due.
(ii) Defined benefit plans
Heineken's net obligation in respect of defined benefit pension plans is calculated separately for each
plan by estimating the amount of future benefit that employees have earned in return for their service
in the current and prior periods; that benefit is discounted to determine its present value, and any
unrecognised past service costs and the fair value of any plan assets are deducted. The discount rate
is the yield at balance sheet date on AA rated bonds that have maturity dates approximating the terms
of Heineken's obligations.
The calculations are performed by qualified actuaries using the projected unit credit method. Where
the calculation results in a benefit to Heineken, the recognised asset is limited to the net total of any
unrecognised actuarial losses and past service costs and the present value of any future refunds from
the plan or reductions in future contributions to the plan.
When the benefits of a plan are improved, the portion of the increased benefit relating to past service
by employees is recognised as an expense in the income statement on a straight-line basis over the
average period until the benefits become vested. To the extent that the benefits vest immediately, the
expense is recognised immediately in the income statement.
In respect of actuarial gains and losses that arise, Heineken applies the corridor method in calculating
the obligation in respect of a plan. To the extent that any cumulative unrecognised actuarial gain or
loss exceeds ten per cent of the greater of the present value of the defined benefit obligation and the
fair value of plan assets, that portion is recognised in the income statement over the expected average
remaining working lives of the employees participating in the plan. Otherwise, the actuarial gain or loss
is not recognised.
(Hi) Other long-term employee benefits
Heineken's net obligation in respect of long-term employee benefits, other than pension plans, is the
amount of future benefit that employees have earned in return for their service in the current and
prior periods; that benefit is discounted to determine its present value, and the fair value of any related
assets is deducted. The discount rate is the yield at balance sheet date on high-quality credit-rated
bonds that have maturity dates approximating the terms of Heineken's obligations. The obligation
is calculated using the projected unit credit method.
(iv) Termination benefits
Termination benefits are recognised as an expense when Heineken is demonstrably committed,
without realistic possibility of withdrawal, to a formal detailed plan to terminate employment before
the normal retirement date. Termination benefits for voluntary redundancies are recognised
OH Heineken N.V.
OVs Annual Report 2006