Notes to the consolidated financial statements continued
3. Significant accounting policies continued
(iii) Fair value hedges
Changes in the fair value of a derivative hedging instrument designated as a fair value hedge are recognised in profit or loss. The hedged item also
is stated at fair value in respect of the risk being hedged; the gain or loss attributable to the hedged risk is recognised in profit or loss and adjusts the
carrying amount of the hedged item.
If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for which the effective interest
method is used is amortised to profit or loss over the period to maturity.
(iv) Separable embedded derivatives
Embedded derivatives are separated from the host contract and accounted for separately if the economic characteristics and risks of the host contract
and the embedded derivative are not closely related, a separate instrument with the same terms as the embedded derivative would meet the definition
of a derivative, and the combined instrument is not measured at fair value through profit or loss. Changes in the fair value of separable embedded
derivatives are recognised immediately in profit or loss.
(e) Share capital
(i) Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity,
net of any tax effects.
(ii) Repurchase of share capital (treasury shares)
When share capital recognised as equity is repurchased, the amount of the consideration paid, which includes directly attributable costs, is net of any
tax effects recognised as a deduction from equity. Repurchased shares are classified as treasury shares and are presented in the reserve for own shares.
When treasury shares are sold or reissued subsequently, the amount received is recognised as an increase inequity, and the resulting surplus or deficit
on the transaction is transferred to or from retained earnings.
Dividends are recognised as a liability in the period in which they are declared.
(f) Property, Plant and Equipment (P, P E)
(i) Owned assets
Items of P, P E are measured at cost less government grants received (refer (q)), accumulated depreciation (refer (iv)) and accumulated impairment
Cost comprises the initial purchase price increased with expenditures that are 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), and the costs of dismantling and
removing the items and restoring the site on which they are located. Borrowing costs related to the acquisition or construction of qualifying assets are
capitalised as part of the cost of that asset. Cost also may include transfers from equity of any gain or loss on qualifying cash flow hedges of foreign
currency purchases of P, P E.
Spare parts that are acquired as part of an equipment purchase and only to be used in connection with this specific equipment are capitalised and
amortised as part of the equipment. For example, purchased software that is integral to the functionality of the related equipment is capitalised as
part of that equipment. In all other cases spare parts are carried as inventory and recognised in the income statement as consumed. Where an item
of P, P E comprises major components having different useful lives, they are accounted for as separate items (major components) of P, P E.
Returnable bottles and kegs in circulation are recorded within P, P E and a corresponding liability is recorded in respect of the obligation to repay
the customers' deposits. Deposits paid by customers for returnable items are reflected in the consolidated statement of financial position within
Heineken N.V. Annual Report 2012