75
Notes to the Consolidated Financial Statements (continued)
(h) Inventories
Heineken NV.
Report of the
Report of the
Financial
Sustainability
Other
Annual Report 2016
Introduction
Executive Board
Supervisory Board
Statements
Review
Information
(vi) Amortisation
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 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
- Reacquired rights 3 - 12 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.
(i) General
Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on the weighted average cost formula, and
includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing
location and condition. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion
and selling expenses.
(ii) Finished products and work in progress
Finished products and work in progress are measured at manufacturing cost based on weighted averages and taking into account the production
stage reached. Costs include an appropriate share of direct production overheads based on normal operating capacity
(iii) Other inventories and spare parts
The cost of other inventories is based on weighted averages. Spare parts are valued at the lower of cost and net realisable value. Value reductions
and usage of parts are charged to profit or loss. Spare parts that are acquired as part of an equipment purchase and only to be used in connection
with this specific equipment are initially capitalised and depreciated as part of the equipment.