Notes to the Consolidated Financial Statements (continued)
3. Significant accounting policies (continued)
Report of the
Report of the
Annual Report 2016
(i) Financial assets
A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is
considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows
of that asset that can be estimated reliably.
Evidence of impairment may include indications that the debtors or a group of debtors are experiencing significant financial difficulty, default or
delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation, and where observable
data indicates that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that
correlate with defaults.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the
present value of the estimated future cash flows discounted at the original effective interest rate. An impairment loss in respect of an available-for-
sale financial asset is calculated by reference to its current fair value.
Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively
in groups that share similar credit risk characteristics.
All impairment losses are recognised in profit or loss. Any cumulative loss in respect of an available-for-sale financial asset recognised previously
in other comprehensive income and presented in the fair value reserve in equity is transferred to profit or loss.
An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial
assets measured at amortised cost and available-for-sale financial assets that are debt securities, the reversal is recognised in profit or loss.
For available-for-sale financial assets that are equity securities, the reversal is recognised in other comprehensive income.
(ii) Non-financial assets
The carrying amounts of HEINEKEN's non-financial assets, other than inventories (refer to accounting policy (h)) and deferred tax assets (refer
to accounting policy (s)), are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication
exists, the asset's recoverable amount is estimated. For goodwill and intangible assets that are not yet available for use, the recoverable amount
is estimated each year at the same time.
For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that
generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the cash-generating
The recoverable amount of an asset or CGU is the higher of an asset's fair value less costs of disposal and value in use. In assessing value in use,
the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset or CGU.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the acquirer's CGUs, or groups of CGUs
expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level
within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored on regional, sub-regional or country
level depending on the characteristics of the acquisition, the synergies to be achieved and the level of integration.
An impairment loss is recognised in profit or loss if the carrying amount of an asset or its CGU exceeds its recoverable amount. Impairment losses
recognised in respect of a CGU are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the
carrying amounts of the other assets in the unit (group of units) on a pro rata basis. An impairment loss in respect of goodwill is not reversed.
In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has
decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount.
An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been
determined, net of depreciation or amortisation, if no impairment loss had been recognised.
Goodwill that forms part of the carrying amount of an investment in an associate and joint venture is not recognised separately, and therefore is not
tested for impairment separately. Instead, the entire amount of the investment in an associate and joint venture is tested for impairment as a single
asset when there is objective evidence that the investment in an associate may be impaired.