Notes to the Consolidated Financial Statements (continued)
3. Significant accounting policies
(a) Basis of consolidation
(ii) Acquisitions of non-controlling interests
(iv) Loss of control
Report of the
Report of the
Annual Report 2016
The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements and have
been applied consistently by HEINEKEN entities.
(i) Business combinations
Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred
to HEINEKEN. HEINEKEN controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the
ability to affect those returns through its power over the entity.
HEINEKEN measures goodwill at the acquisition date as the fair value of the consideration transferred plus the fair value of any previously held
equity interest in the acquiree and the recognised amount of any non-controlling interests in the acquiree, less the net recognised amount (generally
fair value) of the identifiable assets acquired and liabilities assumed. When the excess is negative, a bargain purchase gain is recognised immediately
in profit or loss.
The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally
recognised in profit or loss.
Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that HEINEKEN incurs in connection with
a business combination are expensed as incurred.
Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is classified as equity,
it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent considerations
are recognised in profit or loss.
Acquisitions of non-controlling interests are accounted for as transactions with owners in their capacity as owners and therefore no goodwill
is recognised as a result. Adjustments to non-controlling interests arising from transactions that do not involve the loss of control are based
on a proportionate amount of the net assets of the subsidiary.
Subsidiaries are entities controlled by HEINEKEN. HEINEKEN controls an entity when it is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries
are included in the consolidated financial statements from the date that control commences until the date that control ceases. Accounting policies
of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by HEINEKEN.
Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests, even if doing so causes the
non-controlling interests to have a deficit balance.
Upon the loss of control, HEINEKEN derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components
of equity related to the subsidiary. Any resulting gain or loss is recognised in profit or loss. If HEINEKEN retains any interest in the previous subsidiary,
such interest is measured at fair value at the date that control is lost. Subsequently, it is accounted for as an equity-accounted investee or as
an available-for-sale financial asset, depending on the level of influence retained.