(vi) Investments in associates andjoint ventures
Investments in associates are those entities in which HEINEKEN has significant influence, but not control, over the financial and operating policies.
Significant influence is presumed to exist when the Group holds between 20 and 50 per cent of the voting power of another entity. Joint ventures are
those entities over whose activities HEINEKEN has joint control, established by contractual agreement and requiring unanimous consent for strategic
financial and operating decisions.
Investments in associates and joint ventures are accounted for using the equity method (equity-accounted investees) and are recognised initially
at cost. The cost of the investment includes transaction costs.
The consolidated financial statements include HEINEKEN's share of the profit or loss and other comprehensive income, after adjustments to align
the accounting policies with those of HEINEKEN, from the date that significant influence or joint control commences until the date that significant
influence or joint control ceases.
When HEINEKEN's share of losses exceeds the carrying amount of the associate, including any long-term investments, the carrying amount is
reduced to nil and recognition of further losses is discontinued except to the extent that HEINEKEN has an obligation or has made a payment
on behalf of the associate or joint venture.
(vii) Transactions eliminated on consolidation
Intra-HEINEKEN balances and transactions, and any unrealised gains and losses or income and expenses arising from intra-HEINEKEN transactions,
are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with equity-accounted associates and
IVs are eliminated against the investment to the extent of HEINEKEN's interest in the investee. Unrealised losses are eliminated in the same way
as unrealised gains, but only to the extent that there is no evidence of impairment.
(b) Foreign currency
(i) Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies of H EINEKEN entities at the exchange rates at the dates of
the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at
the exchange rate at that date. The foreign currency gain or loss arising on monetary items is the difference between amortised cost in the functional
currency at the beginning of the period, adjusted for effective interest and payments during the period, and the amortised cost in foreign currency
translated at the exchange rate at the end of the reporting period.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency
at the exchange rate at the date that the fair value was determined.
Non-monetary items in a foreign currency that are measured in terms of historical cost are translated using the exchange rate at the date of the
transaction. Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences arising on the retranslation
of available-for-sale (equity) investments and foreign currency differences arising on the retranslation of a financial liability designated as a hedge
of a net investment, which are recognised in other comprehensive income.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at cost remain translated into the functional currency
at historical exchange rates.
(ii) Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to euro at
exchange rates at the reporting date. The income and expenses of foreign operations, excluding foreign operations in hyperinflationary economies,
are translated to euro at exchange rates approximating the exchange rates ruling at the dates of the transactions. Group entities, with a functional
currency being the currency of a hyperinflationary economy, first restate their financial statements in accordance with IAS 29, Financial Reporting
in Hyperinflationary Economies (see 'Reporting in hyperinflationary economies' below). The related income, costs and balance sheet amounts are
translated at the foreign exchange rate ruling at the balance sheet date.
Heineken N.V. Annual Report 2011