Notes to the consolidated financial statements
76 Financial statements
3. Significant accounting policies
(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 or recognised as a separate asset, as appropriate, 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 carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of
property, plant and equipment are recognised in the income statement when incurred.
(iv) Depreciation
Land is not depreciated as it is deemed to have an infinite life. Depreciation on other P, P and E is charged
to the income statement on a straight-line basis over the estimated useful lives of items of property,
plant and equipment, and major components that are accounted for separately. Assets under
construction are not depreciated. The estimated useful lives are as follows:
Buildings 30-40 years
Plant and equipment 10-30 years
Other fixed assets 5-10 years
Where parts of an item of P, P and E have different useful lives, they are accounted for as separate items
of P, Pand E.
The depreciation methods, residual value as well as the useful lives are reassessed, and adjusted if
appropriate, annually.
(v) Net gains on sale
Net gains on sale of items of P, P and E are presented in the income statement as other income.
Net gains are recognised in the income statement when the significant risks and rewards of ownership
have been transferred to the buyer, recovery of the consideration is probable, the associated costs can
be estimated reliably, and there is no continuing management involvement with the P, P and E.
(g) Intangible assets
(i) Goodwill
Goodwill arises on the acquisition of subsidiaries, associates and joint ventures and represents the
excess of the cost of the acquisition over Heineken's interest in net fair value of the net identifiable
assets, liabilities and contingent liabilities of the acquiree. Goodwill on acquisitions of subsidiaries is
included in 'intangible assets'. Goodwill arising on the acquisition of associates is included in the carrying
amount of the associate.
In respect of acquisitions prior to 1 October 2003, goodwill is included on the basis of deemed cost,
being the amount recorded under previous GAAP.
Goodwill on acquisitions purchased before 1 January 2003 has been deducted from equity.
Goodwill arising on the acquisition of a minority interest in a subsidiary represents the excess of the cost
of the additional investment over the carrying amount of the net assets acquired at the date of exchange.
Goodwill is measured at cost less accumulated impairment losses (refer accounting policy 3i(ii)).
Goodwill is allocated to cash-generating units for the purpose of impairment testing and is tested
annually for impairment.
Negative goodwill is recognised directly in the income statement.
Heineken N.V. Annual Report 2007
