(iv) Software, research and development and other intangible assets
Purchased software is measured at cost less accumulated amortisation (refer (vi)) and impairment losses (refer accounting policy Bi(ii)). Expenditure
on internally developed software is capitalised when the expenditure qualifies as development activities, otherwise it is recognised in profit or loss
Expenditure on research activities, undertaken with the prospect of gaining new technical knowledge and understanding, is recognised in profit
or loss when incurred.
Development activities involve a plan or design for the production of new or substantially improved products, software and processes. Development
expenditure is capitalised only if development costs can be measured reliably, the product or process is technically and commercially feasible, future
economic benefits are probable, and HEINEKEN intends to and has sufficient resources to complete development and to use or sell the asset. The
expenditure capitalised includes the cost of materials, direct labour and overhead costs that are directly attributable to preparing the asset for its
intended use, and capitalised borrowing costs. Other development expenditure is recognised in profit or loss when incurred.
Capitalised development expenditure is measured at cost less accumulated amortisation (refer (vi)) and accumulated impairment losses (refer
accounting policy 3i(ii)).
Other intangible assets that are acquired by HEINEKEN and have finite useful lives, are measured at cost less accumulated amortisation (refer (vi)) and
impairment losses (refer accounting policy 3i(ii)). Expenditure on internally generated goodwill and brands is recognised in profit or loss when incurred.
(v) Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other
expenditure is expensed when incurred.
Amortisation is calculated over the cost of the asset, or other amount substituted for cost, less its residual value. Intangible assets with a finite life are
amortised on a straight-line basis over their estimated useful lives, other than goodwill, from the date they are available for use, since this most closely
reflects the expected pattern of consumption of the future economic benefits embodied in the asset. The estimated useful lives are as follows:
Strategic brands 40 - 50 years
Other brands 15-25 years
Customer-related and contract-based intangibles 5-20 years
Software 3-7 years
Capitalised development costs 3 years
Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
(vii) Gains and losses on sale
Net gains on sale of intangible assets are presented in profit or loss as other income. Net losses on sale are included in amortisation. Net gains and
losses are recognised in profit or loss 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 intangible assets.
Heineken N.V. Annual Report 2011