Notes to the Consolidated Financial Statements (continued)
(f) Property, plant and equipment
(ii) Leased assets
Report of the
Report of the
Annual Report 2016
(i) Owned assets
Items of property, plant and equipment (P, P E) are measured at cost less government grants received (refer to (q)), accumulated depreciation
(refer to (iv)) and accumulated impairment losses (3i(ii)).
Cost comprises the initial purchase price increased with expenditures that are directly attributable to the acquisition of the asset (such as 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 (refer to 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 or purchased
software that is integral to the functionality of the related equipment are capitalised and amortised 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
Leases in terms of which HEINEKEN assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial
recognition, P, P E acquired by way of finance lease is measured at an amount equal to the lower of its fair value and the present value of the
minimum lease payments at inception of the lease. Lease payments are apportioned between the outstanding liability and finance charges
so as to achieve a constant periodic rate of interest on the remaining balance of the liability
Other leases are operating leases and are not recognised in HEINEKEN's statement of financial position. Payments made under operating leases are
charged to profit or loss on a straight-line basis over the term of the lease. When an operating lease is terminated before the lease period has expired,
any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which termination takes place.
(iii) Subsequent expenditure
The cost of replacing a part of an item of P, P E is recognised in the carrying amount of the item or recognised as a separate asset, as appropriate,
if it is probable that the future economic benefits embodied within the part will flow to HEINEKEN and its cost can be measured reliably. The carrying
amount of the replaced part is derecognised. The costs of the day-to-day servicing of P, P E are recognised in profit or loss when incurred.
Depreciation is calculated over the depreciable amount, which is the cost of an asset, or other amount substituted for cost, less its residual value.
Land except for financial leases on land over the contractual period is not depreciated as it is deemed to have an infinite life. Depreciation on
other P, P E is charged to profit or loss on a straight-line basis over the estimated useful lives of items of P, P E, and major components that are
accounted for separately, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the
asset. Assets under construction are not depreciated. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it
is reasonably certain that HEINEKEN will obtain ownership by the end of the lease term. The estimated useful lives for the current and comparative
years are as follows:
- Buildings 30 - 40 years
- Plant and equipment 10 - 30 years
- Other fixed assets 3 - 10 years.
Where parts of an item of P, P E have different useful lives, they are accounted for as separate items of P, P E.
The depreciation methods and residual value as well as the useful lives are reassessed, and adjusted if appropriate, at each financial year-end.
(v) Gains and losses on sale
Net gains on sale of items of P, P E are presented in profit or loss as other income. Net losses on sale are included in depreciation. 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 P, P E.