Notes to the Consolidated Financial Statements (continued)
(b) Foreign currency
Report of the
Report of the
Annual Report 2016
(v) Interests in equity-accounted investees
HEINEKEN's investments in associates and joint ventures are accounted for using the equity method of accounting. Investments in associates are
those entities in which HEINEKEN has significant influence, but no control or joint control, over the financial and operating policies. Joint ventures
are the arrangements in which HEINEKEN has joint control, whereby HEINEKEN has rights to the net assets of the arrangement, rather than rights
to its assets and obligations for its liabilities.
Investments in associates and joint ventures 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 or joint venture, 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.
(vi) 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
JVs 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.
(i) Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies of HEINEKEN 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 at cost are translated
into the functional currency 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.